First Rate (FR) operates a megastore featuring sports merchandise. It uses an EOQ decision model to make inventory decisions. FR is now considering inventory decisions for its Los Angeles Galaxy soccer jackets product line. This is a highly popular item. Data for 2013 are as follows:

Expected annual demand for Galaxy jackets 7,000

Ordering cost per purchase order $245

Carrying cost per year $7 per jacket

Each jacket costs First Rate $40 and sells for $80. The $7 carrying cost per jacket per year comprises the required return on investment of

$5.20 (13% x $40 purchase price) plus $1.80 in relevant insurance, handling, and theft-related costs. The purchasing lead time is 5 days.

FR is open 365 days a year.

Requirements

1.	Calculate the EOQ.
2.	Calculate the number of orders that will be placed each year.
3.	Calculate the reorder point.