Refer to problem 1. Assuming that holding cost and order costing remain the same, if annual demand for wiper blades doubles to 32000, does the EOQ also double? Explain your answer with relevant calculations.

Data Problem 1

Auto Mart is a mythical seller of a variety of automobile parts and accessories. Auto Mart’s owner, Jonathan Trott, wishes to determine the optimum order quantity for one of the store’s popular wiper blades. The annual demand for the wiper blades is 16,000. The annual holding cost per unit is US$2.50, and the cost to place an order is US$50:

1. What is the EOQ?

2. What are the total annual ordering and holding costs (in U.S. dollars)?