Syarikat Sutera Indah , a large manufacturer of batik and silk, uses a large quantities of cotton cloth in its production process. Throughout the year, the company uses 12,500 metre of this cloth. The fixed costs of placing and receiving an order are $200. The purchase price of the cloth is $25 per metre and the annual cost of carrying this inventory item is 20 percent of the purchase price. The company maintains a 100 metre cloth as safety stock. The cloth supplier requires two weeks delivery time. (Use 52 weeks per year)

i) Compute the EOQ for Syarikat Sutera Indah.

ii) Compute the average inventory including safety stock.

iii) What is the inventory cost?

iv) Using a 52- week year, at what inventory level should an order be placed?