EOQ analysis Tiger Corporation purchases 1,400,000 units per year of one compo-nent. The fixed cost per order is $55. The annual carrying cost of the item is 27% of its $10 cost.

a. Determine the EOQ if (1) the conditions stated above hold, (2) the order cost is $1 rather than $55, and (3) the order cost is $55 but the carrying cost is $0.01.

b. What do your answers illustrate about the EOQ model? Explain.