2.1 (EOQ):

The Lucky Star Co. is planning to stock a new product. The Co. has developed the following information:

Annual usage = 5400 units

Cost of the product = 365 dollars/unit

Ordering cost = 55 dollars/order

Carrying cost = 28% of the cost of the product held per year.

Assumptions: the demand rate is constant; order quantities are fixed; planning horizon is long (infinite)

a Determine the optimal number of units per order

b. Find the optimal order time interval