1. Melewar Inc believes it will sell 4 million liters oil, this coming year (note that this figure is for annual sales). The inventory manager plans to order oil 40 times over the next year. The carrying cost is RM0.03 per liter per year. The order cost is RM600 per order.

1. Calculate the annual carrying cost, the annual ordering cost, and the economic order quantity (EOQ).

(5 marks)

2. Determine the reorder point, if the annual business days is 320 days and the lead time is 7 days.

(3 marks)