PR is a retailer of bicycles. The most popular children’s bicycle has an annual demand of 30 000 units. Demand is predictable and spread evenly throughout the year.
The bicycles are purchased by PR for $200 each. Ordering costs are $150 per order and the annual cost of holding one bicycle in inventory is $25.

Required:
(i) Calculate the economic order quantity (EOQ) for the children’s bicycle.
(ii) Calculate the total annual ordering and holding costs for the bicycle assuming the company purchases the EOQ, does not hold any buffer inventory and the lead time is zero.