Mike and Kelly Kyson were two small city teachers who happen to fall in love and get married. Soon after they were married, children were on the way. Kelly was always involved in crafts and wanted to spend time with her children, so she figured that she could stay home and make leather handbags and purses to earn extra money. After doing this for a while, she grew tired of dealing with the large leather suppliers and jobberswho were giving heavy discounts to large customers, but were charging near retail prices to mid and small business. She decided to directly source the leather herself. To get the volumes necessary to buy directly from the leather tanners and processors, Kelly needed to buy in higher volumes. Initially, she would order large leather shipments and sell-off the excess on EBay. It did not take long for her to realize that she was making more money selling leather than making and selling handbags and purses. Within a couple of years Kelly and Mike became the largest leather suppliers on EBay. They decided to expand their operations and start-up a website and call their new company the Leather Hide Store After getting the Leather Hide Store up and running, the Kysons expect to sell around 7280 hides per year. On top of the web business, the Kysons plan to keep selling on EBay, but they plan to reserve their EBay business to use it to get rid of overstocks or sell special orders. Leather is a natural product and is sold typically as full or half hides. The average hide covers 50 square feet; however, hides can range from 35-to-75 square feet. On average the Kysons pay $125 for the hides, including materials overhead and labor. The inbound freight cost is $8.00; labor to receive each hide and maintain it in inventory cost $5, plus $1 per month. Storage space cost $0.05/sq. ft. per month. The Kysons have decent credit and are able to borrow at and APR of 6%. The Kysons figure that insurance per hide runs about $0.25 per hide; taxes run about $2 per $100 value with a 30% tax rate; loss and damage runs about 4% per year; obsolescence runs 2% per year. While Mike and Kelly decide on the colors and quantity of hides, the actual ordering is Janets responsibility. Janet is their office manager. Janet earns around $700 per week (including salary and fringes) and spends half of her time processing orders and processes an average 4 orders per week. The Kysons would like the ordering process to take less of Kellys time, so that she could spend more time doing other tasks. After operating their website for two months the Kysons hired you as a consultant to stream-line their ordering and inventory process.

Over the most recent 4 week period, the Leather Hide Store had the following daily demand for hides:

	week 1	week2	week 3	week4
Monday	20	32	32	18
Tuesday	33	33	27	35
Wednesday	31	21	26	28
Thursday	30	29	29	34
Friday	24	30	21	27

Over the same 4 week period, they had 16 orders with the following order cycle times: 5, 3, 2, 7, 3, 3, 4, 3, 7, 6, 5, 4, 3, 3, 3, 2, and 5 days

Product Number	Product Name		Units Sold	Price per Unit	Profit per Unit
ES1	Indigo		624	$245.70	$67.76
ES2	Black Cat		260	$167.40	$23.16
ES3	Black Magic		1282	$206.70	$35.50
ES6	Black Pebble		312	$167.40	$16.42
ES7	True Red		520	$245.70	$54.28
ES10	Roasted Red Pepper		312	$152.00	$19.90
ES13	True Burgundy		468	$171.60	$15.23
ES14	Pure Sand		104	$175.50	$16.44
ES18	Polo Brown		1560	$198.00	$20.06
ES19	Cheyenne		412	$247.00	$79.85
ES20	Harvest		936	$222.30	$55.15
ES26	Soft White		208	$202.80	$34.30
ES31	Soft Cream		282	$179.40	$23.03

1. What is the economic order quantity?

2. What will be the number of orders per year based upon the economic order quantity?

3. What is the reorder point?