Calculating the optimum order quantity of specific skew

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An automotive parts suppliers manages a warehouse that specializes in disc brakes. The manager is interested in calculating the optimum order quantity (EOC) of a specific skew. She knows the following information: the annual usage is $3,225; the administrative costs per order is $140 and the carrying cost of the inventory is 0.2. a. What is the optimum order quantity (EOQ)? Show all steps. b. A year later, the administrative costs increased to $150 per order and the annual usage increased to $4,000. However, the company was locked into the EOQ. To what value should the carrying costs of the inventory be revised?

Reference no: EM131150909

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