Assume that Fashion Clothiers Inc. uses 1,440,000 yards of material each year. Further, assume that Fashion can order the material at a cost of $2 per yard, plus fixed ordering costs of $100 per order. The firms carrying cost is 20 percent of the inventory value, at cost.

1. What is the firms inventory EOQ?
2. What is Fashion Clothiers total inventory cost at the EOQ level?
3. Now, suppose the manufacturer offers a discount of 0.5 percent for orders of at least 40,000 yards. Should Fashion Clothiers increase its ordering quantity to take the discount?