Run First, Inc. uses 1000 units of Product X each year, on a continual basis. Product X

Question:

Run First, Inc. uses 1000 units of Product X each year, on a continual basis. Product X has a fixed cost of $100 per order. There is a carrying cost of $1.50 per unit, per year. It takes 10 days for shipments to be received after an order is placed. Run First, Inc. wants to hold a 20 day usage in inventory as safety stock.
a. Calculate the EOQ
b. Calculate the reorder point.