An assistant manager of Costco is reviewing the costs associated with one of the store’s better-selling products. The data available follows.
Demand = 1,700 units/month
Order cost = $400/order
Holding cost = $10/unit/year
a. What would be the EOQ and its associated ordering and holding costs?
b. If the holding cost is actually $12 per unit per year and all other information remains the same, what is the new EOQ and the total annual inventory cost?