Pamona electronics sells about 350 of a particular model of video cassette recorder (VCR) each year. The item costs $425, and the holding cost is 26 percent per year. The cost to process an order is $60.

a. How many of the VCRs should Pamona order each time it buys them?

b. What will be the annual ordering and holding costs if the company decies to keep a safety stock of 4 units?