Problem $2.(12$ points$)$

A produce distributor uses $2,500$ packing crates a month, and each crate is purchased at a cost of

$$12.$ The manager has assigned an annual carrying cost of $30$ percent of the purchase price per

crate. The cost of placing an order is $$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$)$