Diagnostic Supplies has expected sales of 50,000 units per year, carrying costs of $2 per unit, and an ordering cost of $5 per order.

a. What is the economic ordering quantity?

b-1. What is the average inventory?

b-2. What is the total carrying cost?

Assume an additional 40 units of inventory will be required as safety stock.

c-1. What will the new average inventory be?

c-2. What will the new total carrying cost be?