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Question 4 Herbert Adams owns two bicycle stores selling bicycles. One particular model is highly popular with annual sales of 5,000 units per year
Question 4 Herbert Adams owns two bicycle stores selling bicycles. One particular model is highly popular with annual sales of 5,000 units per year in each store. The cost of one such bicycle is $1000. Annual holding cost is $400 per unit, and the ordering cost is $200. (1) If each store orders bicycles separately, what is the economic order quantity in each store? (2) If the two stores order bicycles jointly, what is the combined economic order quantity? (3) If each store orders separately, what is the total annual inventory cost (ordering cost + holding cost) of two stores combined? (4) If the two stores order jointly, what is the total annual inventory cost (ordering cost + holding cost)? (5) Please explain why the inventory costs change?
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