ORDERING AND CARRYING COSTS

ORDERING AND CARRYING COSTS
Corsair, Inc., uses 40,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is $40. The cost of holding one unit of inventory for one year is $5. Currently, Corsair places eight orders of 5,000 plastic housing units per year.
Required:
1. Compute the annual ordering cost.
2. Compute the annual carrying cost.
3. Compute the cost of Corsair’s current inventory policy. Is this the minimum cost? Why or why not?
ORDERING AND CARRYING COSTS