monthly demand - 846 ea

order fixed cost - $300

per unit cost - $15

holding cost - 25 %

This dataset represents the number of oil filters sold in a regional market for an auto parts store. The data show monthly demand, fixed ordering costs, price per unit, and the holding cost percentage. What is the Economic Order Quantity for this product? What are the total annual ordering costs?

b. The distributor for the oil filters has informed the auto parts chain that if they upped their order lot size to 2000 units per order, that the price would decrease to $12 ea instead of $15 ea. Assume that the holding cost percentage remains the same, and that the auto parts store could accommodate the extra inventory in its current warehouse. What are the total annual ordering costs? Should the auto parts store change their order quantity based on the new price?