a)Calculate the total annual costs for the order sizes 40,800 and 4,000;

b)Calculate the EOQ & reorder point.

Palawan enterprise makes small bicycle back rack specifically for bicycle enthusiast. The company buys the steel logo which come in sets from an external supplier at RM4 per set. Palawan require 10 sets per working day with an annual demand for 4,000 sets. The unit carrying cost per year is RM0.50. The cost per order is RM8. There are 250 working days in a year. On an average Palawan carries 50 units safety stock. The lead time is 10 working days.