UdogadiRetailStores,aregionalsupermarketchain,orders480,000cansoffrozenorangejuiceperyearfroma Lagos-baseddistributor.Adozen-cancaseoffrozenjuicedeliveredtoUdogadi'scentralwarehousecostsN3600.00,includingfreightcharges.Thecompanyborrowsfundsata10%interestratetofinanceitsinventories.TheUdogadi'spurchasingagenthascalculatedthatit costs N16,800 to place an order for frozen juice and that the annual carrying expense(electricity,insurance,handling,storage) isN130for eachcanof juice.

The Managing Director of Udogadi has always stated that the goal of the store is to guaranteeahighlevelofservice toits frozenjuicecustomers.However, heis notcertainhowtoaccomplish this goal. All previous efforts to attain this service level have failed. In the case ofthe last attempt, it resulted in excessive cash being tied down. Learning that you've beenpursuing your MBA at LBS, he has approached you for help. Assume that the supermarket isopeneverydayofthe year.

1. Whatistheoptimaleconomicquantityoffrozenjuiceheshouldbuyeachtimeanorderis placed?
2. Whatisthetotalannualinventorycostofyourproposalinquestion(b)?