Inventory carrying cost is estimated by accounting to be $1.00 per case per year. This means that if a case of pudding is held in inventory for an entire year, the cost to just carry that case in inventory is $1.00. If a case is carried for only one week, the cost is $1.00/52, or $0.01923. The cost is proportional to the time carried in inventory. There are 200,000 cases in inventory at the beginning of Q1 (this is 200 cases in the 1,000-case units that the forecast is given in).
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