Question: Custom Computers Inc. assembles custom home computer systems. The heat sinks needed are bought for $12 each and are ordered in quantities of 1220 units.

Custom Computers Inc. assembles custom home computer systems. The heat sinks needed are bought for $12 each and are ordered in quantities of 1220 units. Annual demand is 3660 heat sinks, the annual inventory holding cost rate is $3 per unit, and the cost to place an order is estimated to be $49.

Average inventory level=610 units

Calculate number of orders placed per year=3 orders

Calculate annual inventory holding cost.

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