In the second year, Fisk Corporation finds that it can reduce ordering costs to $2 per order, but carrying costs will stay the same at $1.20 per unit.

a. Recompute a, b, c, and din the previous problem for the second year.

b. Now compare years one and two and explain what has happened.

Previous problem

Fisk Corporation is trying to improve its inventory control system and has installed an online system at its retail stores. Fisk anticipates sales of 75,000 units per year, an ordering cost of $8 per order, and carrying costs of $1.20 per unit.