How do I solve this problem for daily inventory costs:

The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four (4) days.

If the order size was 1,000 kilograms of resin, what would be the daily total inventory costs, EXCLUDING the cost of the resin?

500 is the correct answer

Question text

The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days.
If order size was 1,000 kilograms of resin, what would be the length of an order cycle?

To solve this problem, we need to calculate the daily inventory costs, excluding the cost of the resin, for a given order size of 1,000 kilograms of resin.

The daily inventory costs can be calculated by considering the carrying cost and the ordering cost.

1. Carrying Cost:
The carrying cost is the cost to carry a kilogram of resin in inventory for one day. In this case, it is given that the carrying cost is $0.04 per day per kilogram of resin. Since the manufacturing uses resin at a rate of 50 kilograms each day, we can calculate the carrying cost as follows:
Carrying Cost = Carrying cost per kilogram per day * Number of kilograms used per day
Carrying Cost = $0.04 * 50 kilograms
Carrying Cost = $2 per day

2. Ordering Cost:
The ordering cost is the cost associated with placing an order for resin. It is given that the ordering cost is $100 per order.

To calculate the daily total inventory costs, excluding the cost of resin, we need to sum the carrying cost and ordering cost:
Total Daily Inventory Costs (excluding resin cost) = Carrying Cost + Ordering Cost
Total Daily Inventory Costs = $2 + $100 = $102

Therefore, the daily total inventory costs, excluding the cost of the resin, for an order size of 1,000 kilograms of resin is $102.

250