Question: Downey Disks is experiencing some inventory control problems. The manager currently orders four times each year with the annual purchase of the inventory costing $

Downey Disks is experiencing some inventory control problems. The manager currently orders four times each year with the annual purchase of the inventory costing $

200, 000 .

Each inventory item costs $

5,

ordering costs are $

125,

and each item costs $

2.50

to carry. What is the opportunity cost of the present ordering system as compared to an EOQ ordering system?

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