4. A retail company is reevaluating its inventory policy for meeting a constant annual demand of 5,200 units for its top-selling product. The current inventory policy is to order 650 units each time. The company purchases the product from a manufacturer at a wholesale price of $20 per unit. The company also pays $80 as the ordering cost for each order regardless of the order quantity. The company's inventory capital is borrowed from a bank at a simple annual interest rate of 10%. In addition, the company must pay a tax of 6% of the annual inventory value and another 3% of the annual inventory value for insurance. The lead time is estimated to be 4 days and the business opens 365 days a year.
Calculate the total annual holding cost under the current inventory policy:
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