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Credit Where Credit Is Due You are trying to decide whether or not to extend credit to a particular customer. Your variable cost is $15 per unit; the selling price is $22. This customer wants to buy 1,000 units today and pay in 30 days. You think there is a 15 percent chance of default. The required return is 3 percent per 30 days. Should you extend credit? Assume that this is a one-time sale and that the customer will not buy if credit is not extended. The EOQ Annondale Manufacturing starts each period with 10,000 "Long John" golf clubs in stock. This stock is depleted each month and reordered. If the carrying cost per golf club is $1, and the fixed order cost is $5, is Annondale following an economically advisable strategy?

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