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The soft goods department of a large department store sells 175 units per month of a...

The soft goods department of a large department store sells 175 units per month of a certain large bath towel. The unit cost of a towel to the store is $2.50 and the cost of placing an order has been estimated to be $12.00. The store uses an inventory carrying charge of I = 27% per year. Determine:


If, through automation of the purchasing process, the ordering cost can be cut to $4.00, what will be
(3 points) (d) the new economic order quantity,
(1 points) (e) the order frequency, and
(1 points) (f) annual holding and setup costs? Explain these results.

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