Demand for unit Zed tend to be constant at the rate of 4,000 units. The cost per unit is KES 200 and the cost of placing an order is KES 5,000. The company estimates that the annual inventory cost of the unit as a percentage of cost of the average stock is 20%.

Required:

Formulate the best (optimal) inventory policy for Zed i.e. quantity to order (EOQ), frequency of ordering and when to order, re-order level/point (take lead time = 15 days while one year has 300 days), and the total cost associated with the policy