4.) A bicycle manufacturer keeps a stock of wheel tires as a standard item in the companys inventory of component parts. Each year the company, on a random basis, uses about 3,000 of these tires, which costs $20 each. Storage costs, which include insurance and cost of capital, amount to $5 per unit of average inventory. Every time an order is placed for more of these tires, it costs $10.

Whenever tires are ordered, what should the order size be to minimize total costs?

What is the annual cost for ordering tires?

What is the annual cost for storing tires?