Ordering and Carrying Costs

Ottis, Inc., uses 741,060 plastic housing units each year in its production of paper shredders. The cost of placing an order is $31. The cost of holding one unit of inventory for one year is $18. Currently, Ottis places 179 orders of 4,140 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?

- Select your answer -YesNoItem 4