Fashion for Future, Inc. sells a special brand of scarves at a uniform rate of 7,300 per year. The cost of processing an order is $18.25, and the time from ordering to receipt is six days. The scarves cost $2.50 each, and the inventory holding cost is 20 percent of the unit cost per year. Assume that there are 365 days in a year.
a. Calculate the economic order quantity.
b. How many orders should be placed per year?
c. Calculate the reorder point.
d. Calculate the annual cost of processing purchase orders.
e. Calculate the annual holding cost.
f. Calculate the annual purchase costs.
g. Calculate the total annual cost (the sum of ordering cost, holding cost, and purchase costs).