Exercise 20.7 (Algorithmic) Economic Order Quantity

Ottis, Inc., uses 810,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is $30. The cost of holding one unit of inventory for one year is $15. Currently, Ottis places 180 orders of 4,500 plastic housing units per year.

Required:

1. Compute the economic order quantity.

____?____ units

1 (a) Compute the ordering, carrying, and total costs for the EOQ.

Ordering cost	$____?_____
Carrying cost	$____?_____
Total cost	$____?_____

1 (b). How much money does using the EOQ policy save the company over the policy of purchasing 4,500 plastic housing units per order? Round your answer to the nearest dollar

$_____?_____