Fan Base (FB) operates a megastore featuring sports merchandise. It uses an EOQ decision model to make inventory decisions. It is now considering inventory decisions for its soccer jerseys product line. This is a highly popular item. Data for 2015 are:

Expected annual demand for soccer jerseys ..................20,000

Ordering cost per purchase order ............................... $200

Carrying cost per year ........................................... $ 7 per jersey

Each jersey costs FB $40 and sells for $80. The $7 carrying cost per jersey per year comprises the required return on investment of $4.80 (= 12% of $40 purchase price) plus $2.20 in relevant insurance, handling, and theft-related costs. The purchasing lead time is 7 days. FB is open 365 days a year.

Required

1. Calculate the EOQ.

2. Calculate the number of orders that will be placed each year.

3. Calculate the reorder point.