Sunshine Ltd is a retailer in selling sports products. It uses an EOQ decision model to make inventory decisions. It is now considering inventory decisions for its surfing board product line. This is a highly popular item. Data for 2019 are as follows:

Expected annual demand

10 000

Ordering cost per purchase order

$280

Carrying cost per year

$9 per surfing board

Each surfing board costs Sunshine Ltd $55 and sells for $105. The $9 carrying cost per surfing board per year consists of the required return on investment of $5.50 (10% $55 purchase price) plus $3.50 in relevant insurance, handling and storage costs. The purchasing lead time is 7 days. Sunshine Ltd is open 365 days in a year.

Required

1.Calculate the EOQ.

2.Calculate the number of orders that will be placed each year.

3.Calculate the reorder point.