Woden Furniture Ltd distributes children's furniture products in the region.The following information pertains to inventory for the next year:

Expected annual demand in units

22,500

Purchase price per unit

$16

Relevantcost per purchase order

$150

Relevant carrying costs per unit

?

Required annual return on investment

10%

Warehousing, insurance and other carrying costs

$1.40

Current order lot size in units

2,250

Purchase lead time in days

5

Maximum daily sales

120

Work year in days

250

Required:

1.Determine the economic order quantity (EOQ) for Woden Furniture Ltd.

2. Using the EOQ determined in requirement 1, calculate:

2. total annual ordering costs,and
4. total annual carryingcosts.

Round your answers to the nearest dollar.

2. What is the annual savings in inventory costs to Woden Furniture Ltd, if it was to change its current order lot size of 2,250 to the economic order quantity calculated in requirement 1?

3. What is the reorder point assuming average demand and average lead time?