Sam’s Auto Shop services and repairs a particular brand of foreign automobile. Sam uses oil filters throughout the year. The shop operates fifty-two weeks per year and weekly demand is 146 filters. Sam estimates that it costs $18 to place an order and his annual holding cost rate is $3 per oil filter. Currently, Sam orders in quantities of 678 filters. Calculate the total annual costs associated with Sam’s current ordering policy.
Calculate economic order quantity.
___ units
Calculate total annual costs using the EOQ ordering policy.
Calculate penalty costs Sam is incurring by using his current policy.