CAU store sells $1,000$ jackets each month. Each jacket costs the store $$50$ and the company has an annual

holding cost of $20$ percent. The fixed cost of a replenishment order $($including transportation$)$ is $$200.$

a$)$ The store currently places a replenishment order every month for $1,000$ jackets. What is the annual

holding and ordering cost? $(10$ points$)$

b$)$ If the retail store wants to minimize ordering and holding cost, what order size do you recommend? How

much would the optimal order reduce the annual holding and ordering costs relative to the current

policy? $(10$ points$)$