Happy Savers Mart is planning to establish a store in a town where people enjoy drinking green tea. The company estimates that the annual sale of green tea will be 20,000 packs. (Each pack consists of 100 tea bags.) The cost of each pack of tea is £5. Happy Savers Mart has determined that the cost of placing a purchase order of tea packs is £20 per order. The cost to carry one pack of tea for 1 year is £1. The average lead time for a purchase order is 3 weeks. The supplier is reluctant to make frequent deliveries, which has forced Happy Savers to place large orders to avoid any disruption in supply. Since Happy Savers is aware that excess inventory on hand will increase carrying costs, it wants to determine the economic order quantity (EOQ) for the tea packs. The average daily sale and the maximum daily sale of the tea packs is 55 units and 110 units, respectively.

Required
1. Calculate the economic order quantity (EOQ) that will optimally balance Happy Savers’ ordering costs and holding costs.
2. Calculate the safety inventory and the reorder point, taking into account the safety inventory.
3. Discuss the best strategies that Happy Savers Mart can use to reduce the lead time for an order and help address its concern with the high carrying cost.