Jose runs a mail-order business for gym equipment from his house. Annual demand for its best seller item is 25,000 units. This best seller item has a cost of $292 per unit and Jose sells it at $350/unit, including shipping and handling. The annual holding cost per unit for this best seller is $5.50. The cost to process an order of this item is $25. It takes ten (10) days to completely process an order. The working period is 360 days per year.
What should be the minimum storage capacity that Jose needs to accomodate this annual demand? Please provide detailed calculations.