Walmart sells 2,000 units of home goods each month. Each unit costs $40 and Walmart has an annual holding cost of 25 percent. Placing a replenishment order incurs clerical costs of $300/order.
Assume that the shipping company charges $900 as a fixed cost per shipment
A) What is the optimal order size?
B) What is the annual total cost of the optimal policy ( annual clerical costs + annual transportation cost + annual holding cost) ?
Assume that the shipping company charges a variable cost of $0.10 per unit shipped.
C) What is optimal order size?
D) What is the annual total cost of the optimal policy ( annual clerical costs + annual transportation cost + annual holding cost )?