Ordering and Carrying Costs

Ottis, Inc., uses 653,630 plastic housing units each year in its production of paper shredders. The cost of placing an order is $34. The cost of holding one unit of inventory for one year is $14. Currently, Ottis places 163 orders of 4,010 plastic housing units per year.

Required:

1. Compute the annual ordering cost.

_______

2. Compute the annual carrying cost.

_______

3. Compute the cost of Ottiss current inventory policy.

_______

Is this the minimum cost?