Plan A

Q $=200,$ D $=350$ items$/$year

Holding Cost $=0\mathrm{.}5*0\mathrm{.}6*200=60$

Ordering Cost $=350/200*11\mathrm{.}5=20\mathrm{.}13$

Total inventory costs $=60+20\mathrm{.}13=80\mathrm{.}13$

Plan B

Q $=50,$ D$=350$

Holding Cost $=0\mathrm{.}5*0\mathrm{.}6*50=15$

Ordering Cost $=350/50*11\mathrm{.}5=80\mathrm{.}5$

Total inventory costs $=15+80\mathrm{.}5=95\mathrm{.}5$

Calculate the total costs for each plan

and state which one is more preferable along with the reason why