A North Face retail store in Chicago sells 520 jackets each month. Each jacket costs the store $100 and the company has an annual holding cost of 25 percent.The fixed cost of a replenishment order (including transportation) is $100. The store currently places a replenishment order every month for 500 jackets.

Round your answers to 2 decimal places

a) What is the annual holding cost?

b) What is the annual ordering cost?

c) What is the annual total cost including the purchasing cost?

d) If the retail store wants to minimize the annual total inventory cost, what order size do you recommend?

e) How much would the optimal order quantity reduce the annual total inventory cost relative to the current policy?

Answer rating: 100% (QA)

Answer and Explanation Current Ordering Data Annual Demand 520 units x 12 6240 units Cost per order ... View the full answer