Economic Order Quantity

Ottis, Inc., uses 680,625 plastic housing units each year in its production of paper shredders. The cost of placing an order is $42. The cost of holding one unit of inventory for one year is $21. Currently, Ottis places 165 orders of 4,125 plastic housing units per year.

Required:

1. Compute the economic order quantity.

_________________

2. Compute the ordering, carrying, and total costs for the EOQ.

Ordering cost	$___________
Carrying cost	____________
Total cost	$__________

3. How much money does using the EOQ policy save the company over the policy of purchasing 4,125 plastic housing units per order? Round your answer to the nearest dollar

$_____________