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Point 1: Vargas enterprises wishes to determine the economic order quantity (EOQ) for a critical and expensive inventory item that is used in large amounts at a relatively constant rate throughout the year. The firm uses 450,000 units of the item annually, has order costs of $375 per order, and its carrying costs associated with this item are $28 per unit per year. The firm plans to hold safety stock of the item equal to 5 days of usage, and it estimates that it takes 12 days to receive an order of the item once placed. Assume a 365-day year.
Question 1: Calculate the firm's EOQ for the item of inventory described above
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