A clothing line sells out 67 men's bamboo & spandex shirts per month regardless of size. A shirt, for an order quantity of 51-200 pcs regardless of size, costs $6.50 each. The carrying cost is $24 per year. Shipping fee is $190 for 100-1000 shirts.

1. What is the optimal order quantity?
2. What is the reorder point?
3. If the ordering costs were $5 per order, how many units should be ordered at one time?
4. Referring to (a), suppose the company was offered a discount of $0.7 per unit by its supplier for an order of 201-1000 shirts, should it take the discount?

Please use these formulas & show the solution. USe excel if necessary.

The total annual cost is: TC= ch+ LK where: 2 0' K = Incremental cost of placing an order (or setting up production) kc = Annual cost of carrying one unit of inventory D = Annual total usage (demand) in units Q = Optimum order size in units (the unknown) Note that the annual number of orders placed depends on D and Q: D = Annual number of orders Q Also: Q . 7 = Average Inventory (assuming linear usage) \f\f