Tiger Corporation purchases 1,180,000 units per year of one component. The fixed cost per order is $22
The annual carrying cost of the item is 26.1?% of its $1.77 cost.
a. Determine the EOQ if (1) the conditions stated above hold, (2) the order cost is zero rather than $22 and (3) the order cost is $22 but the carrying cost is $0.01
b. What do your answers illustrate about the EOQ model? Explain.