Your company is selling chairs to retailers. The monthly demand is approximately 100 chairs and currently, you are making monthly orders. You pay $28 for each chair and estimate that the annual holding cost is 30 percent of the chairs value. It costs approximately $20 to place an order. You currently have 25 chairs in the safety stock.

a) (10 pts.) Determine the ordering (fixed), holding, and total inventory costs for the current order quantity.

b) (10 pts.) Determine the economic order quantity (EOQ).

c) (10 pts.) How many orders will be placed per year using the EOQ and what is the cycle time? d) (15 pts.) Determine the ordering, holding, and total inventory costs for the EOQ. How has ordering cost changed? Holding cost? Total inventory cost?

e) (10 pts.) What is the reorder point if your company operates 300 days per year and it takes 6 days to receive the orders?