ABC Inc. has collected the following information on one of its products:

Demand = 5,000 units/year

Ordering costs = $12/order

Holding costs = $4/unit/year

Lead-time = 5 days weeks

Unit cost = $748/unit

Number of weeks per year = 50 weeks

lease 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?

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

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