Alps Corporation’s demand for a business publication called GMO is 121,500 copies annually. The cost of GMO is $10 per copy, the set-up cost amounts to $60 per order, the holding cost is 20% of the per-copy cost of the publication. Alps’ objective is to determine how many copies of the publication to order each time to minimize the annual total cost of acquiring and carrying GMO.
What is the optimal annual total cost (TC* )?