The A & M Hobby Shop carries a line of radio - controlled model racing cars . Demand for the cars is assumed to be constant at a rate of 50 cars per month . The cars cost $ 80 each , and ordering costs are approximately $ 15 per order , regardless of the order size . The annual holding cost rate is 20 % . ( a ) Determine the economic order quantity and total annual cost ( in $ ) under the assumption that no backorders are permitted . ( Round your answers to two decimal places . ) Q = TC = $ ( b ) Using a $ 45 per - unit per - year backorder cost , determine the minimum cost inventory policy and total annual cost ( in $ ) for the model racing cars . ( Round your answers to two decimal places . ) Q* = TC = $ ( c ) What is the maximum number of days a customer would have to wait for a backorder under the policy in part ( b ) ? Assume that the Hobby Shop is open for business 300 days per year . ( Round your answer to two decimal places . ) _____ days ( d ) Would you recommend a no - backorder or a backorder inventory policy for this product ? Explain . a. Yes , the maximum wait is over a week long , but the cost savings of the backorder case is large enough to justify a long wait .
b. Yes , the maximum wait is less than a week and the backorder case has a lower cost than the EOQ case . c. No , the maximum wait is over a week long , which does not justify the cost savings of the backorder case . d. No , the maximum wait is over a week long and the EOQ case has a lower cost than the backorder case . e. No , the maximum wait is less than a week but the EOQ case has a lower cost than the backorder case . ( e ) If the lead time is six days , what is the reorder point for both the no - backorder and backorder inventory policies ? ( Round your answers to two decimal places . ) EOQ r =
Backorder r =