1. A cotton fabric manufacturer uses one line to make 10 different colors of fabric. The production rate at this line is 100 yards per hour. Each yard of fabric costs $5 regardless of color and the annual inventory holding cost rate for these fabrics is 20%. Every time the manufacturer changes the line from one color to another, it spends $350 in set up (or ordering) costs. The different color fabrics sold by this manufacturer are divided into three categories. There are five slow moving colors that average 2,000 yards per year per color, three medium moving colors that average 10,000 yards per year per color, and two fast mover colors that average 20,000 yards per year per color
What are the optimal annual inventory holding costs and ordering costs that this manufacturer should incur?
Optimal Annual Holding Cost: $_______________
Optimal Annual Ordering Cost: $______________