Company B is a retailer of mobile phones in Australia that works 250 days in a year. The manager would like you to determine a minimum-cost inventory plan for an upcoming mobile phone to be launched in the market. They have collected the following information: • Annual demand: 750 phones • Phone cost: $1,005 each • Phone RRP: $1,149 each • Net weight: 167 g each • Tare weight: 257 g each • Annual inventory holding cost: 27.5% • Cost per order to replenish inventory: $81.71 • Annual in-transit holding cost: 10% • Freight rate (per kg): $8.10 • Freight-related charges (per shipment): $276.50 (i.e. handling fee, dangerous good fee, and lithium battery fee) • Time to process order for freight: 2 day • Freight transit time: 5 days The manager wants you to determine the following information: a. Economic order quantity b. The total purchasing cost c. The total ordering cost d. The total inventory holding cost e. The total transportation cost (by weight) f. The total freight-related cost (by shipment) g. The total in-transit holding cost h. The total cost for this inventory plan i. The number of orders j. Ordering point k. The profit from this inventory plan

Company B is a retailer of mobile phones in Australia that works 250 days in a year. The
manager would like you to determine a minimum-cost inventory plan for an upcoming mobile
phone to be launched in the market. They have collected the following information:
• Annual demand: 750 phones
• Phone cost: $1,005 each
• Phone RRP: $1,149 each
• Net weight: 167 g each
• Tare weight: 257 g each
• Annual inventory holding cost: 27.5%
• Cost per order to replenish inventory: $81.71
• Annual in-transit holding cost: 10%
• Freight rate (per kg): $8.10
• Freight-related charges (per shipment): $276.50 (i.e. handling fee, dangerous good
fee, and lithium battery fee)
• Time to process order for freight: 2 day
• Freight transit time: 5 days
The manager wants you to determine the following information:
a. Economic order quantity
b. The total purchasing cost
c. The total ordering cost
d. The total inventory holding cost
e. The total transportation cost (by weight)
f. The total freight-related cost (by shipment)
g. The total in-transit holding cost
h. The total cost for this inventory plan
i. The number of orders
j. Ordering point
k. The profit from this inventory plan
You will get higher marks if your model generates only integer results for economic order
quantity and the number of orders.