Please see the problem set out below, and answer A & B. Please show all your steps in arriving at the answer. Clearly state the definitions of terms used, and also state any formulas used.
A
The BOYLEN OIL COMPANY sells empty barrels. The forecasted annual demand for its barrels is 1600. The order processing cost is $10, and inventory holding cost is $25 per item per year. How many barrels should it order in one shipment?
B
The BOYLEN OIL COMPANY has set its order quantity at 35. However, to allow for uncertainties in the market, it wants to hold 2 weeks of safety stock. What should its reorder point be, if the delivery time is 1 week.
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