The resulting annual ordering cost and holding cost

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The monthly demand for each color is 4,000 units. Each cap requires .5 pound of raw cotton that is imported from Colombia. The purchase price per pound is $3.50 and transportation cost by sea is $0.30 per pound. The lead time is 2 weeks with negligible variability. The cost of placing on order, by Cappy R Us is $100, and the annual opportunity cost of capital is 25%.

A. What is the optimal order quantity?

B. How frequently should Cappy R Us order?

C. Assuming that the first order is needed by May 31, when should Cappy R Us place the order?

D. How many orders will Cappy R Us place during the next quarter?

E. What are the resulting annual ordering cost and holding cost?

Reference no: EM132169778

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