# Another popular item at the UCI bookstore is a jacket. Sales are 35 units per week, and

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## Question:

Another popular item at the UCI bookstore is a jacket. Sales are 35 units per week, and the supplier charges $55 per unit. The cost of placing an order with the supplier is $25. Annual holding cost for each unit is 9 percent of a hoodie's value, and the store operates 49 weeks per year (it is closed over the holidays). Assume that there is no lead time and no uncertainty in the sales volume.

- Management currently chooses to order 335 units when they place an order. What is the annual
**ordering**cost of the current ordering policy (in dollars)? - What is the annual
**holding (inventory)**cost of the current ordering policy (in dollars)? - What is the
**total annual****cost**(ordering and holding costs) of the current ordering policy (in dollars)? Note: do NOT include the procurement cost. - What is the optimal order quantity?
- What is the
**total annual****cost**(ordering and holding costs) of the optimal ordering policy (in dollars)? Note: do NOT include the procurement cost. - How much can the shop save in terms of the annual cost if they order optimally (in dollars)?

**Related Book For**

## Operations Management

ISBN: 9781259270154

6th Canadian Edition

Authors: William J Stevenson, Mehran Hojati, James Cao