Sensitivity of EOQ Computations to Changes in Cost Estimates: Retem & Company is instituting an economic order policy for its inventory. Thefollowing data are presented for one item in the inventory:

Required:

a. What is the EOQ, given these data ?

b. What is the annual cost of following the order policy in requirement

(a) if the cost of capital were 15 percent?

c. What is the EOQ and total annual costs if the cost of capital were 20 percent?

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Annual usage Storage costs Cost of capital Order costs 160,000 units $7 per unit (out of pocket) 30% of $275 purchase price per unit $808