Q48
The XYZ Tire Company produces a brand of tire called theRainpath. The annual demand at its distribution center is 12,400tires per year. The transport and handling costs are $2600 eachtime a shipment of tires is ordered at the distribution center. Theannual carrying cost is $3.75 per tire. [2 Marks] (a) Determine theoptimal order quantity and the minimum total annual cost. (b) Thecompany is thinking about relocating its distribution center, whichwould reduce transport and handling costs to $1900 per order butincrease carrying costs to $4.50 per tire per year. Should thecompany relocate based on inventory costs?
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