A-Tech Company uses 36,000 circuit boards each year in its production of stereo units. The cost of placing an order is $15. The cost of holding one unit of inventory for one year is $3. Currently, A-Tech orders 3,000 circuit boards in each order.

1. Compute the annual ordering cost.

2. Compute the annual carrying cost.

3. Compute the cost of A-Tech's current inventory policy.

4. Compute the economic order quantity.

5. Compute the ordering cost and the carrying cost for the EOQ.

Ordering cost	$
Carrying cost	$

6. How much money does using the EOQ policy save the company over the policy of purchasing 3,000 circuit boards per order?

7. Conceptual Connection: Suppose that the supplier charges an extra $0.05 per unit to purchase circuit boards in orders of 1,500 or less. Should A-Tech switch to the EOQ policy or not?