The Good stone Tire Company produces a brand of tire called the Rainpath. The annual demand at its distribution center is 12,400 tires per year. The transport and handling costs are $2600 each time a shipment of tires is ordered at the distribution center. The annual carrying cost is $3.75 per tire.
- Determine the optimal order quantity and the minimum total annual cost.
- The company is thinking about relocating its distribution center, which would reduce transport and handling costs to $1900 per order but increase carrying costs to $4.50 per tire per year. Should the company relocate based on inventory costs?
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