Consider a basic economic order quantity (EOQ) model with the following characteristics: Item cost: $15 Item selling price: $20 Monthly demand: 500 units (constant) Annual holding cost: $1.35 per unit Cost per order: $18 Order lead time: 5 working days Firm's work year: 300 days (50 weeks @ 6 days per week) Safety stock: 15% of monthly demand For this problem, determine the values of:

1.Q* the optimal order quantity and reorder point.

2. M, the maximum quantity in inventory.

3. T, the cycle time in working days.

4. Total annual inventory cost including fixed cost.

5.What is the annual ordering cost?

6.Suppose the vendor demands purchases in multiples of 500 only. What is the increase in total annual inventory cost that this causes?