1. An automotive parts suppliers manages a warehouse that specializes in disc brakes. The manager is

1. An
automotive parts suppliers manages a warehouse that specializes in disc brakes.
The manager is interested in calculating the optimum order quantity (EOC) of a
specific skew. She knows the following information: the annual usage is $3,225;
the administrative cost per order is $140 and the carrying cost of the
inventory is 0.2.
a. What is the optimum order quantity (EOQ)? Show all steps.
b. A year later, the administrative costs increased to $150 per order and the
annual usage increased to $4,000. However, the company was locked into the EOQ.
To what value should the carrying costs of the inventory be revised?

 
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