A computer manufacturer purchases keyboards from a supplier. The need for keyboards is constant throughout the year and equals 150,000 screens per year. The yearly interest rate is estimated to be 25%. The fixed cost of ordering keyboards from the supplier is $2500. The unit cost of one screen is $25.

a) [20 points] What is the economic order quantity of keyboards? What is the order cycle length in months? (There are 12 months in one year.)

b) [20 points] What is the total annual cost if the manufacturer purchases the keyboards in EOQ-size lots ?

c) [10 points] If the total lead time for the keyboards is seven days, what is the reorder point ? (There are 360 days in one year.)