Kris Lee, the owner and manager of the Quality Hardware Store, is re-assessing his inventory policy for hammers. He sells an average of 50 hammers per month. Kris does all the ordering for the store himself and finds that this is taking a great deal of his time. He estimates that the value of his time spent in placing each order for hammers is $45. Chris pays $40 for each hammer and the holding rate per year is 60% of this unit cost.(a) What would the unit holding cost for hammers need to be forKris’ current inventory policy to be optimal according to thebasic EOQ model? What is this unit holding cost as a per-centage of the unit acquisition cost?T (b) What is the optimal order quantity if the unit holding cost ac-tually is 20 percent of the unit acquisition cost? What is thecorresponding value of TVC - total variable inventory costper year (holding costs plus the administrative costs for plac-ing orders)? What is TVC for the current inventory policy?T (c) If the wholesaler typically delivers an order of hammers in5 working days (out of 25 working days in an averagemonth), what should the reorder point be (according to thebasic EOQ model)?(d) Kris doesn’t like to incur inventory shortages of importantitems. Therefore, he has decided to add a safety stock of 5hammers to safeguard against late deliveries and larger-than-usual sales. What is his new reorder point? How much doesthis safety stock add to TVC?