(Show your calculations) (Keep 2 digits after decimal point in case of fractional results)

Consider a products inventory. The annual demand for this product is 9,000 units. The ordering cost is $50 per order. It costs $10 averagely to carry a unit for a year. (This information applies in (1.1), (1.2), (1.3), and (1.4) below.)

(1.1) (10 pts) Suppose that the current order quantity is 500 units per order. Answer the questions (1.1.a), (1.1.b), (1.1.c), (1.1.d), and (1.1.e) assuming the order quantity is Q=500 units per order. Show your calculations.

(1.1.a) Calculate the average inventory (assuming 0 safety stock here).

Your calculations and answer: _________________ .

(1.1.b) Calculate the total annual holding cost.

Your calculations and answer: _________________ .

(1.1.c) Calculate number of orders in a year.

Your calculations and answer: _ ________________ .

(1.1.d) Calculate the current total annual ordering cost.

Your calculations and answer: ___________________ .

(1.1.e) Calculate the total annual cost of inventory.

Your calculations and answer: __________________ .

(1.2) (6 pts) Calculate the best ordering quantity (EOQ).

Your calculations and answer: _______________.

(1.3) (4 pts) Calculate the total annual cost of inventory associated with the EOQ you have found in (1.2).

Your calculations and answer: __________________________________________.

(1.4) (5 pts) If the lead time is 4 days and safety stock is set at 35 units, calculate the re-order point ROP, assuming 360 workdays in a year.

Your calculations and answer: ________________________.