Holding costs are $35 per unit per year, the ordering cost is $120 per order, and sales are relatively constant at 300 per month. (a) What is the optimal order quantity? (b) What are the annual holding and setup costs?
What will be an ideal response?
(a) Order size is Q* = = 157.12 or 157.
(b) Annual inventory costs are ($120 ) + ($35 ) + $2749.49 + $2749.60 = $5,499.09
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