Assume you are the management accountant for the Foleo Group. Tracey Chen, the CFO, has called you into a meeting, to discuss the performance of the Warehouse Manager of the Foleo Fones business unit in managing his inventory stocks. After his last meeting with the Production Manager, Allan Raymond, the Business Unit GM, has supplied Tracey with below data relating to the inventory management practices for the current year. Tracey asks you analyse this data and before her Board meeting next week.

Inventory Management Activities	Current Years Cost
Selection of Supplier	$300
Warehouse rental (variable)	$90,000
Handling of inventory	$1,100
Transportation of inventory	$600
Insurance	$7,400
Unloading delivered inventory from freight truck	$750
Inspecting delivered orders	$900
Spoilage and obsolescence of inventory	$6,000
Theft of inventory	$4,300

The Production Manager has indicated that the Foleo Fones plant requires 24,000 kg of plastics annually and on average, the lead time for deliveries of the plastics is one month. He has also advised he orders 2,000 kg per month, and that the monthly usage typically fluctuates between 1,800 and 2,500 kg. This practice has resulted regularly in stock-out situations. The Manager has also estimated that the above ordering costs will increase by 5% and the carrying costs by 7% next year.

a. Calculate the total annual cost of ordering and holding inventory for the plastics raw materials for the coming year (show all your workings).

b. Calculate the Safety Stock for the plastics raw materials (show all your workings).

c. Calculate the Reorder Point for the plastics raw materials (show all your workings)