EOQ $($Economic Order Quantity$)$: This is the order quantity that minimizes the total holding costs and ordering costs. It can be calculated using the formula:

$2$DS

EOQ$=$ H

where:

D$=$ Demand rate per year

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S $=$ Ordering cost per order

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$>$

H $=$ Holding cost per unit per year

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In this case, D $=1,200$ components$/$month $*12$ months $=14,400$ components per year

S $=$ $$25/$order

H $=20\%$ of $$2\mathrm{.}00$

Therefore, EOQ$=$

$$0\mathrm{.}4/$component per year

$21,440,0250\mathrm{.}4$

$=1,500$components

$2.$ Total Annual Inventory$-$Holding and Ordering Costs: This is the sum of the annual holding costs and the annual ordering costs. Annual Holding Costs $=($EOQ$/2)$ H $=(1,500/2)0\mathrm{.}4=$ $$300$

Annual Ordering Costs $=($D$/$EOQ$)$ S $(14,400/1,500)25=$ $$240$

Total Annual Inventory$-$Holding and Ordering Costs $=$ $$300+$ $$240=$ $$540$

$3.$ Reorder Point: This is the level of inventory which triggers an order for the economic order quantity. It can be calculated using the formula:

Reorder Point $=$ Lead Time Demand

where:

Lead Time Demand $=$ Demand rate per day $*$ Lead time in days

In this case, Demand rate per day $=$ D $/$ number of working days per year $=14,400/250=57\mathrm{.}6$ components per day Lead time $=5$ days