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You have been tasked with determining the EOQ for a certain aspect of raw materials...

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Finance

You have been tasked with determining the EOQ for a certain aspect of raw materials inventory. Fixed ordering costs are $35 per order, total periodic demand is 10,000 units, and the per unit holding cost is $4. What is the EOQ?

a. 4180 units

b. 300 units

c. 418 units

d. 1200 units

Given the information in the previous question, suppose that your purchasing manager has just told you that she can renegotiate the fixed ordering cost down to $30 per order. Determine the effect on the EOQ.

a. increases by 31 units

b. decreases by 31 units

c. decreases by 131 units

d. increases by 131 units

Given the EOQ obtained in the previous question, with the renegotiated ordering cost, what would total inventory costs be for the company?

a. $1,678.30

b. $1,549.20

c. $1,105.16

d. $25,999

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