Demand for a book at Amazon.com is 250 units per week (assume 50 weeks per year). The book is supplied to Amazon from the book publisher for $10 per book plus the cost of shipping the order. The shipping cost has a fixed cost of $50 per order and a variable cost of $2 per book shipped. So, the cost of the books is $121 per book, plus $50 times the number of orders placed.

Assume the annual inventory carrying cost is 20 percent.

a. What is annual holding cost per book?

b. What is the optimal shipment size?

c. What is the average throughput time?

1002W