Question: As a wholesale regional distributor of auto parts, you have an annual demand of 36,000 air filters. Each filter costs you $8.00. Your holding costs are 25% per year of the filter's value and it costs you $10 to process an order. The company is open for business 20 days per month, 12 months per year. It takes 2 days for any order to arrive once it has been placed.

(a) What should be your order size?

(b) What is the maximum inventory level?

(c) Compute the total annual inventory costs (ordering + holding + purchase?)

(d) What is the reorder point?