Q. Item X is a standard item stocked in a company's inventory of component parts. Each year firm, on a random basis, uses about 2,000 of item X, which costs $25 each. Storage costs, which include insurance also cost of capital, amount to $5 per unit of average inventory. Every time an order is placed for more items X, it costs $10.

a. Whenever item X is ordered, illustrate what should order size be?

b. Illustrate what is annual cost for ordering item X?

c. Illustrate what is annual cost for storing item X?