Question: Danny Steel, Inc., fabricates various products from two basic inputs, bar stock and sheet stock. Bar stock is used at a steady rate of 1,000 units per year and costs $200 per bar. Sheet stock is used at a rate of 500 units per year and costs $150 per sheet. The company uses a 20 percent annual holding cost rate, and the fixed cost to place an order is $50, of which $10 is the cost of placing the purchase order and $40 is the fixed cost of a truck delivery. The variable (i.e., per unit charge) trucking cost is included in the unit price. The plant runs 365 days per year. Use the EOQ formula with the full fixed order cost of $50 to compute: (a) The optimal order quantities (b) The order intervals (c) The annual cost for bar stock and sheet stock. What fraction of the total annual (holding + order) cost for stocks consists of fixed trucking cost? Hints: 2AD Q* = T* Ystock (Q*) = h hQ* AD 2 Q* + == 2ADh