Retail giant, BAM Incorporated, sells 5,000 hammers annually. Each hammer costs BAM $5 purchase. Inventory carrying costs are 10% (.10) of the purchase price and the cost of placing an order with its supplier is $50.

EOQ = (2 x O x T)/(C x pp)

TIC = [(C x pp) x Q/2] + [O x T/Q]

T=5,000 pp=$5 C=.10 O=$50

(2a) Calculate EOQ

(2b) Calculate the TIC

(2c) Calculate the TIC when the Q is 1,250 units