Use the following to calculate the inventory level:

DIH$=60$ days

Annual CGS $=$$$36,500,000$

Using the information from problem $1,$ calculate the change in inventory level and change in operating cash flow that would occur if DIH increased to $70$ days.

Management at Ardmore Farm and Seed has never analyzed the costs associated with their inventory policy, and they currently have a large stock of insecticide in the warehouse. They estimate that it costs $$25$ to place an order, and it costs $$0\mathrm{.}25$ per gallon to hold the spray. The firm requires $80,000$ gallons for the year $($assume $365$ days$).$

a$.$ Calculate the EOQ.

b$.$ Calculate the total cost of inventory implied by the EOQ from a$.$

c$.$ Calculate the total cost of inventory at the EOQ$+-1,000$ gallons.

d$.$ If it takes seven days to receive an order from suppliers, determine the appropriate reorder point.