EOQ and estimation error Tuphe University Book Store expects to sell 33,000 volumes of a paperback book entitled How to Become a CPA Made Easy. The cost of the book is $3.75, and the cost of placing an order for books is $200. The bookstore manager believes that the cost of carrying inventory is 10 percent of book cost, but the actual cost is 15 percent of book cost.

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REQUIRED a. Compute the EOQ using both a 10 percent and a 15 percent carrying cost. b. Determine the cost of estimating carrying cost incorrectly, assuming 15 percent is correct.