A produce distributor uses 1,250 packing crates a month, and each crate is purchased at a cost of $12. The manager has assigned an annual carrying cost of 20 percent of the purchase price per crate. Ordering costs are $45. Currently the manager orders once a month in equal quantities to fulfill the demand.
a) What is the Economic Order Quantity (EOQ) for this product? (4 pts)
b) How much could the firm save annually in total holding and ordering costs by ordering at the EOQ level? (8 pts) (Show the computations for the total holding and ordering costs in detail)
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A produce distributor uses 1,250 packing crates a month, and each crate is purchased at a cost of $1...
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