Ottis, Inc., uses 636,740 plastic housing units each year in its production of paper shredders. The cost of placing an order is $28. The cost of holding one unit of inventory for one year is $13. Currently, Ottis places 158 orders of 4,030 plastic housing units per year.
1. Compute the annual ordering cost.
$
2. Compute the annual carrying cost.
$
3. Compute the cost of Ottis’s current inventory policy.
$