The Burlap Tire Company is a mythical producer of a brand of tires known as the Snowgrip. The annual demand for this brand of tires at its distribution center is 14,000. The cost of ordering these tires for the distribution center for each order placed is $1,200 per order. The annual holding cost is $8.50 per tire per year (in U.S. dollars):

1. What is EOQ and the total annual cost at EOQ?

2. If the company decides to place more frequent orders, then the ordering cost would increase to $1,800 per order. Nevertheless, the increased frequency of orders would decrease the annual holding cost to $6.50 per tire per year. Should the distribution center order tires more frequently?