Fourth Question: Problem solving (15 Points)

A Focal Firm has an annual requirement of 3,600 units of a component a year. With Ordering costs of $15 per order, and carrying costs per unit are 40 percent of the purchase price when purchase price is of $1 each and lead time of 30 days. Determine the Economic order quantity of components to order

. Hints: approximate your answers - Q is equal to Q*- calculate EOQ first. Calculate:

(EXPLAIN YOUR RESULTS)

1. The EOQ in units.

2. Number of orders per year

. 3. Annual Cost of ordering, annual cost of carrying inventory, and total annual costs.

4. Show your answer graphically