Mark Jaoobs is the owner of a truck repair shop. He uses an EOQ model for each of his truck parts. He initially predicts the annual demand for heavy-duty tires to be 2,500. Each tire has a purchase price of $70. The incremental ordering costs per purchase order are $56. The incremental carrying costs per year are $5.60 per unit plus 10% of the supplier's purchase price. Requirements 1. Calculate the EOQ for heavy-duty tires, along with the sum of annual relevant ordering costs and carrying costs. 2. Suppose Jaoobs is correct in all his predictions except the purchase price. (He ignored a new law that abolished tariff duties on imported heavy-duty tires, which led to lower prices from foreign competitors.) If he had been a faultless predictor, he would have foreseen that the purchase price would drop to $44 at the beginning of the year and would be unchanged throughout the year. What is the cost of the prediction error? Economic order ' """ _ quantity _ . _ Requrrement 1. Calculate the ng With the sum of annual relevant ordering costs and carrying costs. '\\ / Begin by selecting t1e formula used to calculate EOQ. (D = Demand in units for one year, P = Ordering cost per purchase order, C = Carrying cost of one unit in stock, Q =Any order quantity) EOQ- E ' C (Round the denominator to the nearest cent. Round your nal answer to the nearest whole tire.) The EOQ for heavy-duty tires is :] tires. Next, calculate Mark Jaoobs's total annual re evant costs for the E00 mlculated in requirement 1. Begin by selecting the formula used to calculate Mark Jacobs's total annual relevant costs. (D = Demand in units for one year, P = Ordering cost per purchase order, C = Carrying cost of one unit in stock, Q =Any order quantity) 2DP Total relevant ordering costs = ? (Round your nal answer to the nearest whole number.) The total annual relevant costs for the EOQ calculated in requirement 1 is $:]. Requirement 2. Suppose Jacobs is correct in all his predictions except the purchase price. (He ignored a new law that abolished tariff duties on imported heavy-duty tires, which led to lower prices from foreign competitors.) If he had been a faultless predictor, he would have foreseen that the purchase price would drop to $44 at the beginning of the year and would be unchanged throughout the year. What is the cost of the prediction error? Let's begin by calculating the E00, under the new purchase price. The new EOQ under the prediction is :] tires. The cost of the prediction error can be calculated using a three-step procedure: The cost of the prediction error can be calculated using a threestep procedure: Step 1: Compute the monetary outcome from the best action that could have been taken given the actual amount of the cost input (the new purchase price). The total annual relevant costs for the E00 calculated in the previous step is $:]. Step 2: Compute the monetary outcome from the best action based on the incorrect amount of the predicted cost input (the original purchase price). The total annual relevant costs for the E00 calculated in requirement 1, but using the new carrying costs is $:]. Step 3: Compute the difference between the monetary outcomes from Step 1 and Step 2: (Use a minus sign or parenthesis for any negative amounts.) The cost of the prediction error is