State drive (SSD) at a fixed price of Ksh.5000 per unit. The estimated sales are 25000 units per month, the ordering cost per order is Ksh.4000 and the average holding cost per unit per annum is estimated to be 12% per unit. The firm maintains a safety stock of 1000 units. Lead time is 10days and the average working days in a year is 250 days.

Required

Compute

1. Economic order quantity
2. The holding cost and ordering cost at economic order quantity