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.
a. Calculate the EOQ.
b. 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.
c. Using the original assumptions, recalculate the EOQ if the per-unit holding cost increases to $6.