Perry Co. predicts it will use 25,000 units of material during theyear. The expected daily usage is 200 units, and there is anexpected lead time of five days and a desired safety stock of500 units. The material is expected to cost $5 per unit. Perry antici-pates it will cost $50 to place each order. The annual carrying costis $.10 per unit.

Compute the order point.2. Determine the most economical order quantity by use of theEOQ formula.3. Calculate the total cost of ordering and carrying at the EOQpoint.