Grateful Company manufactures a special blend of pork marinade. The company buys one of the spices used in the marinade in 10-pound bags that cost P5 each. The company uses 50,000 bags per year. The average cost to carry a 10-pound bag in inventory per year is Pc1. The cost to place an order is P12.

1. If Grateful follows the economic order quantity, determine the total cost per year associated with the spices. (round off the EOQ to whole number) 2. If the lead time for an order is normally five working days and Grateful normally carries 100 bags as safety stock, determine the reorder point. (assuming 250 working days in a year) 3. If the supplier offers 5% quantity discount for orders of 2,500 bags, determine the total cost per year associated with the spices. 4. Given the two options, what is the optimal order size?