Compute rose total annual cost

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Reference no: EM13534409

2. Rose sells a line of upscale tuxedo shirts in her boutique. She charges $300 per shirt, and sells 30 shirts per week on average. Currently, Rose orders an eight-week supply at a time from an apparel manufacturer. She pays $150 per shirt, and it takes 2 weeks to receive each delivery. Rose estimates her administrative cost of $225 to place one order. She estimates her cost of capital at 20%, i.e., each dollar's worth of idle inventory costs her $0.20 per year.
(a) Compute Rose's total annual cost (material + ordering + carrying inventory). (1 pt)
(b) In order to minimize annual cost, when (ROP) and how much should Rose order in each batch? What will be her total annual cost (including the material cost)?

Reference no: EM13534409

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