The following inventory data has been established for company XYZ.

• Orders must be placed in multiples of 100 units
• Annual sales are 338, 000 units
• Purchase price per unit is P3
• Carrying cost is 20% of the purchase price of goods
• Cost per order placed is P24
• Desired safety stock 14,000 units, this amount is not on hand initially.
• Two weeks are required for delivery
• To minimised total inventory costs how many units should be ordered each time the company runs out of stock?
• At what inventory level should a reorder be made
• How may orders should the firm place each year?
• Calculate total inventory costs given the following order quantities. (1) 4,000 units, (2) 4,800 units or (3) 6,000. Compare these costs with the total costs incurred using EOQ.