Question: Problem 1) (12 points) A produce distributor uses 2,560 packing crates a month, and each crate is purchased at a cost of $16. The manager

Problem 1) (12 points)
A produce distributor uses 2,560 packing crates a month, and each crate is purchased at a cost of
$16. The manager has assigned an annual carrying cost of 25 percent of the purchase price per
crate. Ordering costs are $240. Currently the manager orders once a month.
a) What is the Economic Order Quantity (EOQ) for this product? (4 pts)
b) How much could the firm save annually in total holding and ordering costs by ordering at the
EOQ level? (8 pts) (Show the computations for the total holding and ordering costs in detail)

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