14, The Whacko Brass Company produces brass door knockers, among other things. The company expects next year’s demand for door knockers to be 18,000 units at a uniform rate. It costs $125 to set up the equipment to produce the door knockers, and the production rate is 5,000 per month. The company’s accountant estimates that it costs $0.30 per year to hold a door knocker in inventory.

a. How many knockers should the company produce each time it initiates production of the product?

b. It takes 3 weeks from the time the warehouse orders more knockers until finished knockers begin to arrive. At what inventory level should the company release production orders if it desires 1.5 times the average lead-time use to be designated as safety stock?