Company X is a manufacturer of antifoam reagent. Company Y is the manufacturer of monoclonal antibody. Company Y orders 200 batches of antifoam reagent weekly from Company X and it costs them $500 to process each order. Their yearly inventory carrying cost averages about 20% of their gross income. If the unit cost of each bottle of 25 g antifoam reagent is $45 calculate the following.

a) How much is spent on placing orders annually?

b) What is the average inventory in units and dollars?

c) What is the annual inventory carrying cost?

d) What is the overall cost of order placement and carrying inventory?

e) Company Y has decided to order the amount suggested by EOQ model in order to reduce their overall cost for inventory ordering and carrying. Calculate part a through part d using EOQ model.

NOTE: Both companies have 250 working days per year, which corresponds to 5 working days in a week and 50 weeks in a year.