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Compute total annual cost of ordering and carrying inventory

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Question - Dresses-We-Sell offers a line of upscale evening dresses in a boutique. The store charges $500 per dress and sales average 20 units per week. Currently, they order 80 dresses at a time from the manufacturer and pay $200 per dress. Lead-time is 2 weeks. The store estimates the administrative cost of placing each order to be $200. Adding the cost of capital and related costs the store manager believes that each dollar's worth of idle inventory cost $0.30 per year. Compute the total annual cost of ordering and carrying inventory?

Reference no: EM132843962

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