) A shop selling a single product operates 52 weeks per year. Sales are 18 units per week and the supplier charges 60 TL per unit. Each time an order given 45 TL has to be paid to the supplier. Annual holding cost is one-fourth of the units value.

1. (10 points) The store currently uses a lot size of 468 bags (i.e., Q = 468). What is the annual holding cost of this policy? Annual ordering cost? Without calculating the EOQ, how can you conclude from these two calculations that the current lot size is too large?
2. (10 points) How frequently will orders be placed if the EOQ is used and what is the total annual costs based on EOQ?
3. (10 points) Let the demand is variable with the following setting, the average demand is 18 units per week with a standard deviation of 5 units. Also, suppose that the lead time is constant and at two weeks. Determine the safety stock and reorder point if management wants a 90 percent cycle-service level. What is the total annual costs under continuous review system?
4. (10 points) Assume that now we have periodic review system. With the setting given in the sub-question b, determine the time between the orders, target inventory level. What is the total annual costs under periodic review system?