$10.50 per month.
It’s not really a good idea to have your inventory be overpriced for a month and then have a few more months to figure out which items are going to be in stock. It’s also not a good idea to have a good amount of inventory in the middle of the month and then have a couple months to figure out which items are going to be in stock.
The single-period inventory model works because, as stated, the inventory is not overpriced for the month. The inventory is not overpriced because it’s not actually overpriced, and the stock is not overpriced because it only has a few months until it is.
The issue is that if you have so much inventory in the middle of the month that you have to buy it on the spot, then the inventory will be overpriced for the month and you’ll end up spending more money than you could possibly need to buy. The problem is that the inventory might be overpriced for the month because you just didn’t realize it when you bought it.
Another popular, but not entirely true, misconception is the (single-period) inventory model. This model assumes that there are no inventory overages and that all inventory is bought at the beginning and paid for out-of-pocket. The problem is that the inventory you buy in this model is not “overpriced” because it is “over-”priced. You have to buy the inventory for whatever it is you want to sell.
In the single-period model, the inventory you buy in will probably be overpriced because you just didnt realize it when you bought it. You probably bought a lot of inventory when you made a decision to purchase, and you have no idea why you bought that particular inventory.
The overage cost is a bad concept because it assumes that you are spending a lot of money and that, like with the inventory, you are not really paying for what you buy. The overage cost means that you are paying an extra amount of money just to buy the inventory when you should be paying the same amount to buy the inventory. This is like a restaurant’s tip, it’s not really a tip because you are actually paying for the meal.
The point is that in a single-period inventory you should be paying for what you buy, not for what you don’t buy. The overage cost is a nice way to say, “you are paying for what you don’t buy”.
In a single-period inventory the inventory cost is not actually the amount you spend. A single-period inventory is just one of those things where you are paying for what you don’t buy. A restaurant has a tip, and they also have a single-period inventory. Its not the tip, its the amount you pay that you dont buy. In this case, you are paying for what you dont buy, and not the tip.
If you buy something for zero, no one will be watching you.