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 $200,000.

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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