The local Toyota dealer has to decide how many spare shock absorbers of a particular type to order for repairing Toyota automobiles. This shock absorber has a demand of four units per month and costs $25 each. The carrying charge is 30 percent per year, and the ordering cost is $15 per order.
a. What is the EOQ for this item?
b. How often will the dealer reorder this part?
c. What is the annual cost of ordering and carrying this part?