Green Thumb Garden Centers sells 240,000 bags of lawn fertilizer annually. The optimal safety stock (which is on hand initially) is 1,200 bags. Each bag costs Green Thumb $4, inventory carrying costs are 20 percent, and the cost of placing an order with its supplier is $25.
Task:
Question 1: What is the economic ordering quantity?
Question 2: What is the total inventory cost at the EOQ level?
Note: Please show the work not just the answer.