Response to the following problem:
Hurricane, Inc. is evaluating its management of inventory. Hurricane's management estimates that Hurricane needs 100,000 units per month. Each time it places an order to replenish inventory, it costs Hurricane $50. It costs approximately $5 per month to carry one unit.
a. If Hurricane orders 20,000 units each time it places an order, what are the ordering costs per month?
b. If Hurricane Company orders 20,000 units each time it places an order, what are the holding costs of inventory per month?
c. What is the economic order quantity for Hurricane? How do the inventory costs change if Hurricane orders 1,000 units more than the EOQ each time? How do the inventory costs change if Hurricane orders 1,000 units less than the EOQ each time?