Consider the following inventory information and relationships for the F. M. Beaner Corporation:

• Orders can be placed only in multiples of 100 units.
• Annual unit usage is 300,000.
• The carrying cost is 30% of the purchase price of the goods.
• The purchase price is $10 per unit.
• The ordering cost is $50 per order.
• The desired safety stock is 1000 units. (This does not include delivery- time stock.)
• Delivery time is 2 weeks.

1. What is the optimal EOQ level?
2. How many orders will be placed annually?
3. At what inventory level should a reorder be made?
4. What is the total cost of EOQ based system? Don't forget Safety stock.
5. What happens to EOQ if the carrying cost rises? Explain.