Reference no: EM133133707

A wholesaling business purchases an item from a manufacturer at a cost of $50 per unit.  On average, the business sells 12,500 units of this item each year to retailers. It costs the wholesaler $22 per order to process a purchase transaction and receive its shipment.  The annual inventory carrying cost per unit for the item is 40% of its purchase cost per unit per year.

1. Using the Basic Economic Order Quantity model, what is the EOQ for this item? Round answer to 1 decimal.     
2. How many orders per year will be placed for this item? Round answer to 1 decimal.
3. What will the average inventory amount be for this item? Round answer to 1 decimal. 
4. What is the total annual cost (including purchasing cost, ordering cost, and holding cost) if we order in Basic EOQ amounts? Round cost to a whole dollar amount.