Re: Efficiency Gains/Cost Control Projects Techsavvy is excited that your firm consents to advise us on our efforts to improve inventory cost controls. As discussed in our initial meeting, the personal electronics accessory market is very competitive. Every efficiency gain increases our bottom line as we pursue ways to address the impact of market saturation on profitability. Background: TechSavvy Electronics Store is a well-known retailer specializing in selling the latest electronic gadgets and accessories, with a wide range of products, from smartphones to laptops and gaming consoles. They have recently started selling a new type of high-quality, noise-canceling headphones called "SoundWave." The store has a centralized warehouse where they keep their inventory and ships products to their multiple retail outlets across the country. Problem: As the demand for SoundWave headphones has increased, TechSavvy Electronics Store needs to optimize their inventory management to minimize the costs associated with ordering and holding inventory. The store's management wants to determine the optimal order quantity for the SoundWave headphones to ensure efficient inventory management and cost savings. Parameters: - Annual sales of 5,000 units of SoundWave headphones - Unit cost is $199 - Shipping and handling is $100 per order. Takes clerk earning $20 /hour 45 minutes to place each order. - Storage, insurance, and other inventory holding expenses is about 5% of the unit cost - Office open 275 days per year - Order turnaround time is 5 days Objective: Techsavvy requests a methodology that consistently minimizes the annual variable costs associated with ordering the SoundWave headphones from the manufacturer. Techsavvy looks forward to your process recommendation and considerations for maintaining these inventory cost controls