Ordering and Carrying Costs
Ottis, Inc., uses 582,010 plastic housing units each year in its production of paper shredders. The cost of placing an order is $28. The cost of holding one unit of inventory for one year is $20. Currently, Ottis places 143 orders of 4,070 plastic housing units per year.
Required:
1. Compute the annual ordering cost. $
2. Compute the annual carrying cost. $
3. Compute the cost of Ottis’s current inventory policy. $