ORDERING COST, CARRYING COST, AND TOTAL INVENTORY-RELATED COST Aravan Company purchases 4,000 units of Product Beta each year in lots of 400 units per order. The cost of placing one order is $20, and the cost of carrying one unit of product in inventory for a year is $4.

Required:

. How many orders for Product Beta does Aravan place per year?

. What is the total ordering cost of Beta per year?

. What is the total carrying cost of Beta per year?

. What is the total cost of Aravan’s inventory policy for Beta per year?

Exercise