ABC Inc. estimated that the demand of its products is 5000 units per year. However, due to the COVID-19 pandemic, the demand for year 2023 will see a 10% decline. ABC Inc. has also collected the following information on one of its products:

Ordering costs = $12/order

Holding costs = $4/unit/year

Lead-time = 5 days weeks

Unit cost = $748/unit

Please answer the following questions:

a. The firm currently orders 500 units per order. What is the total cost of ordering and holding these goods under this system in 2023?

b. Determine their economic order quantity and cost of ordering and holding goods using the EOQ in 2023.

c. Which ordering policy leads to a lower total cost? How much does this ordering policy save in 2023?