A cellphone manufacturer orders batteries in lot sizes of 15,000 batteries. Each phone manufactured by the company requires one battery. The annual demand for cellphones is 250,000 phones. The ordering cost for the batteries is $2,500 per order, and the annual carrying cost is $0.50 per battery.

a. What is the economic order quantity of batteries?

b. What are the annual cost savings if the company changes from an order size of 15,000 batteries to the economic order size?

c. One supplier offers a discount of $0.20 per unit off the purchase price of orders in lots of 75,000 units or more. What impact would this have on the EOQ, and should the order size be changed?