EOQ Model

A computer repair store is managing its inventory of monitors. It has an estimated annual

demand of $540$ units. The cost to place an order is $$100.$ and the holding cost for each unit is

$$120$ per year.

a$)$ Currently, not knowing about EOQ, the purchasing manager places an order for the

monitor once a month, i$.$e$.,$ twelve times per year. What is the annual setup cost $+$ annual

inventory holding cost under this ordering pattern?

b$)$ One day, the manager realizes that using the optimal order quantity $Q^{**}$ would reduce total

inventory cost. Find the optimal order quantity $Q^{**}[$Rounded to whole number$].$

When using this optimal order quantity, what is the order cycle $($in months$)$ between two

orders and what is the corresponding annual setup cost $+$ annual inventory holding cost?