Midwest Charm, Inc. specializes in selling scented farm equipment. The company has established a policy of reordering inventory once a month. A recently employed MBA has considered Midwests inventory problem from the EOQ model viewpoint. If the following constitute the relevant data, how does the following current policy compare with the optimal policy?

Ordering cost = $2,525 per order

Carrying cost = 35% of purchase price

Purchase price = $15,000 per unit

Total sales for year = 660 units

Safety stock = 15

9. At the EOQ, how often would the company need to reorder?

A. Once a week

B. Every other week

C. Once a month

D. Once every 2 months

E. Once every 3 months

10. At the EOQ, what is the firms total inventory cost per year, assuming safety stock = 15 units?

11. If the firm uses the EOQ model, how much would the firm save in inventory costs per year?