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  3. 6. (3 points) for product w, a firm has an annual

6. (3 points) For product W, a firm has an annual holding cost that is...

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Accounting

6. (3 points) For product W, a firm has an annual holding cost that is 15% of the item cost, an ordering cost of $100 per order, and annual demand of 15,000 units (operating 50 weeks per year). The following price schedule applies to the firms purchases. The lead time is 1 week.

Units Ordered

Price Per Unit

1 250

$33.00

251 500

$32.00

501 699

$31.00

700

$30.00

1) Determine the most cost-effective ordering quantity (1 point)

2) What is the total cost for the order quantity determined in 1)? (1 point)

3) Calculate the reorder point (0.5 point)

3) Describe the inventory policy based on your calculation results (0.5 point)

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