2) Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomass fastest-moving inventory item has a demand of 6,000 units per year. The cost of each unit is $100, and the inventory carrying cost is $10 per unit per year. The average ordering cost is $30 per order. It takes about 5 days for an order to arrive, and the demand for 1 week is 120 units. (This is a corporate operation, and there are 250 working days per year.) (20p)

e) What is the total annual inventory cost, including cost of the 6,000 units? (2p)

f) Suppose that the ordering cost is not $30, and Kratzer has been ordering 150 units each time an order is placed. For this order policy to be optimal, determine what the ordering cost would have to be? (2p)