Solve Exercise 20 19: (as below)

Turfpro Company produces lawn mowers and purchases 4,500 units of a rotor blade part each year at a cost of $30 per unit. Turfpro requires a 15% annual rate of return on investment. In addition, the relevant carrying cost (for insurance, materials handling, breakage, etc.) is $3 per unit per year. The relevant ordering cost per purchase order is $75.

1- Calculate Turfpros EOQ for the rotor blade part.

2- Calculate Turfpros annual relevant ordering costs for the EOQ as calculated in 1.

3- Calculate Turfpros annual relevant carrying costs for the EOQ as calculated in 1.

4- Assume that demand is uniform throughout the year and known with certainty so there is no need for safety stocks. The purchase-order lead time is half a month. Calculate Turfpros reorder point for the rotor blade part.