Question: A produce distributor uses 800 packaging crates a month, which it purchases at a cost of $10 each. The manager has assigned an annual carrying

A produce distributor uses 800 packaging crates a month, which it purchases at a cost of $10 each. The manager has assigned an annual carrying cost of 35% of the purchase price per crate. Ordering costs are $28. Currently the manager orders once a month. How could the firm save annually in ordering and carrying costs by using the EOQ?

Determine the economic order quantity.

Currently, the company uses an order quantity of 850.

How much would the company save annually in total ordering and carrying costs by using the EOQ?

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