1. ABC Company sells 3,807 chairs a year at an average price per chair of $180. The carrying cost per unit is $20.38. The company orders 230 chairs at a time and has a fixed order cost of $97.3 per order. The chairs are sold out before they are restocked. What are the total shortage costs?
2. ABC Company sells 2,942 chairs a year at an average price per chair of $173. The carrying cost per unit is $19.97. The company orders 500 chairs at a time and has a fixed order cost of $41 per order. The chairs are sold out before they are restocked. What is the economic order quantity?