1. Sarmi Cat Food is a very popular product at Altons grocery. Demand for this is relatively constant, and the total demand for the year is 1,200 bags. The cost of placing an order is $40.5, while the holding cost is $3 per unit per year. The store is open 300 days per year. The lead-time for this is 8 days.

a. If Alton places 50 orders per year, what would her annual ordering and holding costs be?

b. If Alton wishes to minimize his total inventory cost, how many units should he order each time an order is placed?

c. What is the reorder point?

2. Selen recently took over a beauty supply store. Her predecessor always ordered shampoo in quantities of 100 units. Selen is reevaluating this policy. Based on her analysis, the cost to place each order is $35 and the holding cost is $8 per shampoo bottle per year. The annual demand for this product is 2500 bottles. Should Selen change the current order policy and, if so, how much can she save?