Torero Bookstore is a local bookstore selling textbooks and stationary items. The yearly demand for spiralbound notebooks at the store is constant at 2000 notebooks/year. It purchases the notebooks from a supplier at $1.00 per notebook. Each time Torero Bookstore places an order it incurs a fixed handling cost of $15. The company estimates that the monthly holding cost of inventory is 2% of the unit purchasing cost. Torero Bookstore needs your help in determining the optimal ordering policy. (Do NOT round numbers, especially inventory, to integer. Round numbers to 2nd decimal place.)

a. Determine the Economic Order Quantity, the time between placement of orders and the total annual cost incurred by Torero Bookstore. (Do not round EOQ to integer) (12 points)

b. Determine the reorder point assuming the order lead time is 2 workdays and Torero Bookstore operates 250 days a year. (4 points)

c. Suppose that the supplier is a wholesale seller and requires orders to be placed only in multiples of 200 notebooks. What is the new optimal order quantity? How much additional total annual cost would Torero Bookstore incur to meet this requirement? (8 points)