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The XYZ Company buys two base ingredients, A and B, for use in its manufacturing plant from a base chemical distributor, the ABC Company. Each

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The XYZ Company buys two base ingredients, A and B, for use in its manufacturing plant from a base chemical distributor, the ABC Company. Each of these items are used at a uniform rate for producing various pharmaceutical products. For each purchase order, XYZ incurs a fixed major ordering and shipping cost of $1150 and pays minor handling charges of $60 for item A and $75 for item B. Its inventory carrying cost rate is $0.25/$/year. The following table shows other relevant information: Item: A B Monthly Usage (lbs.): 9500 700 Purchase Price/lb.: $2.00 $4.50 The ABC Company ships its base chemicals to its customers by 20000 lb. tanker trucks. (a) Currently, XYZ orders these two items independently from ABC in full tanker-load quantities, when needed. What is the annual total relevant cost resulting from this ordering policy

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