Dresses-We-Sell

Dresses-We-Sell offers a line of upscale evening dresses in a boutique. The store charges $500 per dress and sales average 20 units per week. Currently, they order 80 dresses at a time from the manufacturer and pay $200 per dress. Lead-time is 2 weeks. The store estimates the administrative cost of placing each order to be $200. Adding the cost of capital and related costs the store manager believes that each dollar's worth of idle inventory cost $0.30 per year.

1. Compute the total annual cost of ordering and carrying inventory.
2. If they wish to minimize cost, when and how much should the store order in each batch? (Assume that the store will order enough units to cover demand for some number of weeks - n, so the question is to find the value of the integer n yielding the lowest total cost.)
3. Find the number of inventory turns per year given the old and the new policy.