A car dealer pays $17,985 for each car purchased. The annual holding rate is estimated at 25%, and the ordering cost is $7,558. The dealer is selling an average of 516 cars a year.

3. Note the new information:

The dealership can only park 45 cars in its small parking lot. Therefore, if needed, it will lease a nearby bigger parking lot, and use it to park access inventory.

The dealer can get a discount of $1000 on the car's price if his order size is 275 cars or more.

3-3 A car kept in the leased parking lot costs the dealer additional $250 in holding cost (which increases Ch). Calculate the annual total cost if the dealer decides to accept the "275" deal. Break down the costs: Annual Ordering cost, Annual Holding cost in the small parking lot, Annual Holding cost in the leased parking lot, Annual Purchasing cost.