Kenchana Indah manufactures battery powered toy car for toddlers. Due to the increased price of rubber tires, the costing manager thinks it is important to ascertain the optimum order quantity with minimum ordering and holding costs. Each unit of toys car uses 3 wheels. The annual demand for the toy car is 80,000 units with a minimum production of 250 units and maximum of 400 units. The insurance for the inventory is RM12.50 per unit

whereas the labour and storage costs are RM400 per unit. Additionally, the company has to bear RM550 each time the order takes place. Calculate the followings for the rubber tires:

i. Economic Order Quantity (EOQ) using the formula method