Question: Smart Light uses 5,000 security cameras when installing security systems. The cost of placing an order is $150 per order. The cost of each camera

Smart Light uses 5,000 security cameras when installing security systems. The cost of placing an order is $150 per order. The cost of each camera is $10.50. Currently Smart places 10 orders per year. The carrying cost of each camera is $ 1.50

Required:

  1. Compute the total annual carrying and ordering cost of the current policy.
  2. Compute the total annual carrying and ordering cost for EOQ.
  3. Compute the cost savings of EOQ versus current policy
  4. Suppose the currents supplier is offering to sell the cameras to Smart for $10 if smart would order 2,500 per order. Should Smart take offer or switch to EOQ?

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