Question: Annual demand has historically been about 15,000 units. Each unit costs about $40. For the annual report, due out in June, the corporate accounting department calculates inventory-holding costs by multiplying the value of each item by 0.40. The Director of Purchasing told you that his "cost of ordering" is about $82 per order. He is currently ordering 1,000 at a time. How large should the standard order size be for this product? How much are the Purchasing Director’s policies costing your company? (Calculate the ordering and holding costs associated with his policies and compare them to the "optimal" ordering and holding costs.)