The annual demand for H&C products is approximately 90,000 cwt. The cost of the product is $300 per cwt. Order processing costs are $100 per order, inventory carrying costs are 20%, and the inventory-in-transit cost is 10%.

Current transportation program: H&C currently ships via Full Truckloads at a rate of $1.50 per mile per truckload from a supplier that is 1,000 miles away. Transit time is 6 days. A full truck holds 10,000 cwt.

Proposal: An LTL carrier has solicited your business.

Rate of $12 per cwt for shipments between 2,000 and 4,999 cwt

Rate of $8 for shipments of 5,000 cwt and more.

Transit time is 3 days. Assume 365 days/year.

What is the annual inventory holding cost (carrying cost) of the current program?

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Group of answer choices

250,000

1,000,000

300,000

500,000