Problem $1$: $(10$ Points$)$

A company decides to establish an EOQ for an item. The annual demand is $200,000$ units. The

ordering costs are $$40$ per order, and inventory$-$carrying costs are $$2$ per unit per year.

Calculate the following:

$($a$).$ The EOQ in units.

$($b$).$ Number of orders per year.

$($c$).$ Annual ordering cost, annual holding cost, and annual total cost

Problem $2$: $(10$ Points$)$

Given this information:

Expected demand during lead time $=400$ units

Standard deviation of lead time demand $=50$ units

Assuming that lead time demand is distributed normally. The risk of stockout is $1$ percent during

lead time.

$($a$)$ What amount of safety stock is appropriate?

$($b$)$ Calculate ROP