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ABC is a distributor of DVDs. KMart is a local retail outlet which sells blank...

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Accounting

ABC is a distributor of DVDs. KMart is a local retail outlet which sells blank and recorded DVDs. KMart purchases DVDs from ABC at $5.00 each; the units are shipped in packages of 25. ABC pays all incoming freight, and KMart does not inspect the DVDs due to ABC's reputation for high quality. Annual demand is 104,000 DVDs at a rate of 2,000 units per week. KMart earns 15% on its cash investments. The purchase order lead time is one week. The following cost data are available:Relevant ordering costs per purchase order$50.00Carrying costs per package per year:$3.00Relevant insurance, materials handling, breakage, etc., per year

What is the economic order quantity?

a.138 packages

b.198 packages

c.200 packages

d.874 packages

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