Lisa Surowsky was asked to help in determining the best ordering policy for a new product. Currently, the demand for the new product has been projected to be about 1,000 units annually. To get a handle on the carrying and ordering costs, Lisa prepared a series of average inventory costs. Lisa thought that these costs would be appropriate for the new product.

The results are summarized in the following table.

These data were compiled for 10,000 inventory items that were carried or held during the year and were ordered 100 times during the past year. Help Lisa determine the EOQ.

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COST FACTOR COST ($) Taxes 2,000 Processing and inspection 1,500 New product development 2,500 Bill paying 500 Ordering supplies 50 Inventory insurance 600 Product advertising 800 Spoilage 750 Sending purchasing orders 800 Inventory inquiries 450 Warehouse supplies 280 Research and development 2,750 Purchasing salaries 3,000 Warehouse salaries 2,800 Inventory theft 800 Purchase order supplies 500 Inventory obsolescence 300