Phyllis Limited produces a product called SOMUAH. The manufacture of this product requires raw materials per month of 1,000kg and this is even throughout the year. The ordering cost per order is GH₵...

Phyllis Limited produces a product called SOMUAH. The manufacture of this product requires raw materials per month of 1,000kg and this is even throughout the year. The ordering cost per order is GH₵ 250 and each kilogram costs GH₵ 25.00. Annual holding cost is estimated at 20% of the cost of a kilogram of material.

Required: Calculate the following:

a) The Economic Order Quantity (EOQ)

b)  Annual Inventory Cost