Part A and Part B in the button is solved already.

The question is :

How does total annual inventory cost under EOQ (see part B below), compare to current inventory cost (see part a)?

(Part A)

Number of Orders = 600,000/40,000= 15

Total Ordering Cost = Cost per Order * Number of Orders = 50*15= $750

Average Inventory = (40,000 + 0)/2+ 10,000= 30,000 units

Carrying Cost= 30,000*1.20= $36,000

Total Annual Inventory Cost= $750+$36,000= $36,750

(Part B) Calculate total annual inventory cost under EOQ.

Total Inventory Cost =S* + H * Average Inventory = 50* + 1.20 * 1493.03= 1341.64 + 1791.64 = 3,113.28

Total Annual Inventory Cost under EOQ = $3,113.28