Ordering and Carrying Costs

Ottis, Inc., uses 773,500 plastic housing units each year in its production of paper shredders. The cost of placing an order is $35. The cost of holding one unit of inventory for one year is $19. Currently, Ottis places 170 orders of 4,550 plastic housing units per year.

Required:

1. Compute the annual ordering cost.

$fill in the blank 1

2. Compute the annual carrying cost.

$fill in the blank 2

3. Compute the cost of Ottiss current inventory policy.

$fill in the blank 3

Is this the minimum cost?

YesNo