ABC company begins a review of ordering policies of its continuous review system by checking the…

ABC company begins a review of ordering policies of its continuous review system by checking the current policies for a sample of SKUs. Following are the characteristics of one item: Monthly Demand (d) = 64 units per month Ordering cost (s) – $50/order Holding cost (H) – $13/unit/year Assume 12 months in a year. Calculate the following: (a) item’s EOQ (b) annual holding cost (c) annual holding cost (d) the total annual inventory cost (e) Compare the cost of the optimal policy with the current policy with Q – 150. How much cost would be saved by switching to the optimal ordering policy? Show the approach

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