Review Session Exam 2TOM Fall 2018Question 1: Multi-PeriodEverest Company is a Nepalese based company who specializes in providing emergency medical kits to prospective Himalayan climbers. Each medical kits includes 2 tubes of antibiotic cream, medical gloves, medical tape, 10 bandages, ibuprofen, skin glue, and splint materials. Annual demand for the medical kits is 5,000. Bandages are sourced from MedCo, based in Kathmandu, at a cost of $50 per pack of five with a lead time of 1 week and transportation cost of $300 per order. Lead time standard deviation for bandage demand is 300 bandages. Everest’s purchasing cost is $100 per order. Everest operates only during the climbing season which is 25 weeks per year and during that time tries to maintain a 99% service level (z = 2.33). Everest estimates their annual holding cost per bandage to be $2.50.1.Determine the Economic Order Quantity and Re-Order Point with Safety Stock for the bandages in the emergency medical kit.2.Explain the importance of EOQ in optimizing the ordering process. How will Everest Inventory Manager use these numbers in managing her inventory?3.How many orders of bandages should be place during the year?4.What is the ordering cost of the bandages?