Problem:
A produce distributor uses 760 packing crates a month, which it purchases at a cost of $10 each. The manager has assigned an annual carrying cost of 35 percent of the purchase price per crate. Ordering costs are $28. Currently the manager orders once a month.
Required:
Question 1) How much could the firm save annually in ordering and carrying costs by using the EOQ? Solve the problem and show all work.