The demand for electrical components is fixed at a rate of 2400 units/month.Each time the store makes an order ot costs 320$.The item costs $3.the annual inventory holding cost rate is 20%. Q*=5543 units, T8=2.3 months.

Explanation: Periodic rderis calculated on the annual demand basis. Annual demand D=2400 *12units/year. The order cost K is $320 and now we need h which is holding cost per unit. As we have $3 per unit cost the annual holding rate is 0.2 of it, which is 0.2*3= $0.6 /per unit holding cost in $. Then we have the EOQ= sqrt(2*2400*12*320 /0.6)=5543 units/order. With K=320, h=$0.6 we have Toptimal (in years) = sqrt(2*320/(0.6*2400*12))=0.19yr=2.3 months- every 2.3 months the inventory is to be replenished by 5543 units.

So, components are stored in inventory for 2.3 months before they are fully sold. The inventory turns ( annually) in such case is1/ 0.19 ( year)=5.26

Lets increase the inventory annual holding cost rate from 20% to 30%, all else being the same How would that reflect on the EOQ value, optimal period and inventory turns#?

Note for help: consistency matters- if the inventory holding cost rate is given as annual, the demand D also has to be given as annual.