Three items are produced in a small fabrication shop. The shop management has established the requirement that the shop never has more than $3000 invested in the inventory of these items at one time. The management uses a 25 percent annual interest charge to compute the holding cost. The relevant cost and demand parameters are given in the following table. Demand rate Variable cost Setup cost 1 1850 50 100 Item 2 1150 350 150 3 800 85 50 Use the EOQ model to compute the lot sizes that the shop should be producing so that they do not exceed the budget.