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. (4 marks)

2. Calculate the number of orders that will be placed each year. (3 marks)

3. Calculate the reorder point. (3 marks)