An appliance store carries a specialty model of microwave ovens. The demand for the microwave oven is relatively constant at 250
0 units per year. Placing an order costs the store $500 regardless the quantity ordered. Carrying one unit over a one year period costs the store $50. The store opens 300 days per year and the lead time for this item is 12 working days. Because of the special features of the microwave oven, customers may buy it whether it is currently available in the store. Hence, the store is considering selling it on a back order basis if it is beneficial. It is estimated that one unit on back order for a one year period costs the store $150. Assuming the inventory policy of the appliance store does not allow stock out, determine total annual relevant, including the ordering and holding, cost.
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