In Problem 2 in Chapter 15, Carpet City orders Soft Shag carpet from its own mill. Using the 3-month moving average forecast of demand for month 9 as the monthly forecasts for all of next year, a production rate at the mill of 1,200 yards per day (with the mill operating 260 days per year), an annual carrying cost of $0.63, a $425 cost for setting up a production run and delivering the carpet to the store, and a lead time for receiving an order of 7 days, determine the optimal order size, the minimum total annual inventory cost, and the reorder point (given that Carpet City is open 360 days per year).
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