Demand for a cleaning item at a retailer is 1000 units per year. A processing fee of $10 will be charged for each order placed. The purchasing cost of the item is $20. The annual cost to caryy an item in inventory is 20% of the item costs. Use fixed order quantity model.
1. What is the annual inventory holding costs if the order quantity is 240 units each time an order is placed?
2. If the optimal economic order quantity is used to place the order, how many times is the order placed in a year?