Conestoga Cutting Co. orders blades required for its new line of scissors. When they place an order, they traditionally order 50 blades at a time. Conestoga Cutting Co. estimates their carrying cost at 35% of the $12 cost per blade, and the annual demand averages 275 blades per year. With the assumptions of the basic EOQ model, determine the following:

a) For what value of order cost, would Conestoga's action be considered "optimal"?

b) If the true ordering cost turns out to be much lower than your answer in part a) above, what action

should be taken on Conestoga's ordering policy?