Al-Tawheed Discount Store sells a certain type of office chair for E£400. The annual holding cost is E£40 per unit per year, annual demand is 900 chairs, and the order cost is E£800 per order. The lead time is 14 days. The store is open 360 days per year.
a) If the company is ordering twice per year, what is the total cost of inventory?
b) If the company uses the basic EOQ model, how many orders will be placed per year and what is the total cost of inventory?
c) What is the reorder point?