HighLife Corporation has the following information:
Average demand = 30 units per day
Average lead time = 40 days
Item unit cost = $45 for orders of less than 400 units
Item unit cost = $40 for orders of 400 units or more
Ordering cost = $50
Inventory carrying cost = 15 percent
The business year is 300 days.
Standard deviation of demand during lead time = 90
Desired service level = 95 percent
What is the TAC at $40/unit? (Pick the number closest to the correct answer.)
A. $351,750
B. $362,325
C. $355,840
D. $362,240
B. $362,325
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