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.

1. 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)? 
2. What is the annual holding (inventory) cost of the current ordering policy (in dollars)?
3. What is the total annual cost (ordering and holding costs) of the current ordering policy (in dollars)? Note: do NOT include the procurement cost.
4. What is the optimal order quantity?
5. What is the total annual cost (ordering and holding costs) of the optimal ordering policy (in dollars)? Note: do NOT include the procurement cost.
6. How much can the shop save in terms of the annual cost if they order optimally (in dollars)?

Answer rating: 100% (QA)

Lets break down the solution step by step Given data Weekly sales D 35 units Supplier price per unit ... View the full answer