Suppose you are a purchasing agent who is responsible for bar stock that your company makes into wrenches. Each bar costs $18 and annual demand is stable at 2,000 bars/year. The firms uses a 15% holding cost (of the cost of the product) and an annual holding fee of $1/bar. The cost to place an order is $55. (Hint: Holding cost is made-up of two parts.)

a) What is the optimal order quantity?

b) What is the annual holding cost?

c) What is annual ordering cost?