The Cloth Center, Inc. buys and sells fabrics to a wide range of industrial and consumer users. One of the product it carries is denim cloth used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier officer of the Clothe Center, Inc. has collected the following information: Annual Demand 20,000 yards Ordering cost per purchase order P 160 Carrying cost per year 20% of purchase costs Safety stock requirements None Cost of denim cloth P 8 per year The purchasing lead time is 2 weeks. The cloth center is open 250 days a year (50 weeks for 5 days a week)

Required:

1. Draw the inventory levels (using a line graph) using the X-axis for the time, and Y-axis for the level of inventory.

2. Determine the EOQ for the Cloth Center. Provide for solutions.