Company X has a weekly demand is for 45 cases, 50 weeks per year. The annual cost of holding inventory is 15% of the cost of the inventory.

Cost per case $120

Shipping cost (for any size shipment) $290

Cost of labor to place and process an order $10

a) Use the EOQ model to find the optimal (whole) number of cases per order. If they uses this order quantity, what will be its resulting inventory related (ordering plus holding) cost per case sold?

b) The supplier offers that company X 1% quantity discount, i.e., a cost of $118.80 per case, if Company A orders at least 300 cases at a time. If they wish to minimize its total annual (purchasing + ordering + holding) cost, what order quantity should it use? What will be its resulting total annual total cost? Annual purchasing cost? Annual ordering cost? Annual holding cost?