1. An auto parts supplier sells Hardy -brand batteries to car dealers and auto mechanics . The annual demand is approximately 1,200 batteries . The supplier pays $28 for each battery and estimates that the annual holding cost is 30 percent of the battery's value .It costs approximately $20 to place an order (managerial and clerical costs). The supplier currently orders 100 batteries per month a. Determine the ordering ,holding ,and total inventory costs for the current order quantity. b. Determine the economic order quantity (EOQ). c. How many orders will be placed per year using the E00 ? 0'. Determine the ordering , holding ,and total inventory costs for the E00 . How has ordering cost changed ? Holding cost ? Total inventory cost? Solution We are given the following information: Annual demand :0 = 1200 batteries per year Item cost : c = $28 per battery Holding cost : H = ic = 0:30l28) = $8.40 per battery per year Order cost: 5 = $20 per order Current order quantity: Q = 100 batteries a. The current ordering and holding costs are: D 1200 100 _S+3H =_;20:+_15.40i= 24a+420 =$660 Q 2 100 - 2 - .' 2 DS_ .' 2*1200* 20 b. The EOQ is 0* = 15'T i' T: 75-5 \"75 batteries 2: ew; QL c. The company will place 75 orders per year