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Walmart sells 3,000 units of home goods each month. Each unit costs $200 and Walmart has an annual holding cost of 20 percent. Placing a replenishment order incurs clerical costs of $550/order. The shipping company charges $3,500 as a fixed cost per shipment along with a variable cost of $0.10 per unit shipped.
a) What is the optimal order size for Walmart?
b) What is the annual holding cost of the optimal policy?
c) How many orders per year does Walmart place?
d) What is the annual clerical cost?
e) What is the annual fixed transportation cost?
f) What is the annual variable transportation cost?
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