Item X is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 1,500 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $5 per unit of average inventory. Every time an order is placed for more item X, it costs $6.
a. Whenever item X is ordered, what should the order size be? (Round your answer to the nearest whole number.)
Order size
b. What is the annual cost for ordering item X? (Round your answer to 2 decimal places.)
Ordering cost $
c. What is the annual cost for storing item X? (Round your answer to 2 decimal places.)
Holding cost $