Herman always carries an inventory of between 60,000 and 80,000 at his store. herman's military antiques

hermans-military

#1

herman always carries an inventory of between 60,000 and 80,000 at his store. herman’s military antiques. his annual costs for carrying this inventory are 4% for storage, 6% for insurance, 3% for taxes, and 12% interest. what is the greatest possible carrying cost for hermans inventory

Answer:

Assuming that the inventory is $60,00 to $80,000,
4% of 80,000 is 80,000⋅0.04=3200
6% of 80,000 is 80,000/cdot0.06=4800
3% of 80,000 is 80,000/cdot0.03=2400
12% of 80,000 is 80,000/cdot0.12=9600
3200+4800+2400+9600=20,000
We use 80,000 since this is the upper limit of Herman’s inventory.