Problem
M. Cotteleer Electronics supplies microcomputer circuitry to a company that incorporates microprocessors into refrigerators and other home appliances. One of Cotteleer's components has an annual demand of 265 units, which is constant throughout the year. The carrying cost is estimated to be $1.25 per unit per year, and the ordering cost is $19 per order.
1. To minimize cost, how many units should be ordered each time an order is placed?
2. How many orders are needed per year with the optimal policy?
3. What is the total annual cost of ordering and holding inventory?