1. XYZ is a retailer and sells 105,000 units per year. It purchases from a single supplier. Fixed costs per order are $948 and carrying cost is $11 per unit. How many units should XYZ purchase per order? That is, what is the Economic Order Quantity?

2. XYZ is a retailer and sells 104,000 units per year. It purchases from a single supplier. Fixed cost per order is $850 and carrying cost is $9 per unit.

Suppose XYZ orders 8,000 units per order from the supplier. Calculate the sum of carrying cost and the shortage cost.