Economic Order Quantity

Ottis, Inc., uses 731,025 plastic housing units each year in its production of paper shredders. The cost of placing an order is $30. The cost of holding one unit of inventory for one year is $15. Currently, Ottis places 171 orders of 4,275 plastic housing units per year.

Required:

1. Compute the economic order quantity.

units 1,710

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

Ordering cost	$__________
Carrying cost	12,825
Total cost	$__________

3. How much money does using the EOQ policy save the company over the policy of purchasing 4,275 plastic housing units per order? Round your answer to the nearest dollar

$_________