Discount-Lighting, as part of its new JIT program, has signed a long-term agreement with its supplier in China and will now be ordering these halogen lamps online. Ordering costs will drop to $.50 per order, but Discount-Lighting has also reassessed its carrying costs and has raised these to $20 per lamp.
What is the new economic order quantity?
How many orders will now be placed?
What is the total annual cost of managing the inventory with this policy?