The Greenmore Lawn Products Company purchases large

quantities of ammonium nitrate to be used in manufacturing lawnquantities of ammonium nitrate to be used in manufacturing lawn

fertilizers. They purchase $20,000$ tons of ammonium nitrate fromfertilizers. They purchase $20,000$ tons of ammonium nitrate from

AgriChem each year, at a cost of $$125$ per ton. The annual unitAgriChem each year, at a cost of $$125$ per ton. The annual unit

holding cost is $40$ percent of purchase cost, and ordering cost isholding cost is $40$ percent of purchase cost, and ordering cost is

$$500$ per order.$$500$ per order.

$1)1)$ The current order quantity for ammonium nitrate is $1,000$ tons.The current order quantity for ammonium nitrate is $1,000$ tons.

What is the total annual cost using this order quantity?What is the total annual cost using this order quantity?

$2)2)$ What should be the EOQ for ammonium nitrate?What should be the EOQ for ammonium nitrate?

$3)3)$ Using the EOQ found in part $(2),$ how many ammonium nitrateUsing the EOQ found in part $(2),$ how many ammonium nitrate

orders will be placed annually?orders will be placed annually?

$4)4)$ How much money could be saved annually by switching from theHow much money could be saved annually by switching from the

current order quantity of $1,000$ tons to the EOQ?current order quantity of $1,000$ tons to the EOQ?

$5)5)$ If AgriChem requires purchases of full truckloads, which contain $25$If AgriChem requires purchases of full truckloads, which contain $25$

tons each, what is the best order quantity for Greenmore?tons each, what is the best order quantity for Greenmore?

$6)6)$ Now, AgriChem is offering Greenmore a $10\%$ discount if theyNow, AgriChem is offering Greenmore a $10\%$ discount if they

purchase at least $5,000$ tons at a time. Should Greenmore increasepurchase at least $5,000$ tons at a time. Should Greenmore increase

their order quantity in order to get the discount? Ignore the fulltheir order quantity in order to get the discount? Ignore the full

truckload requirement for this question.truckload requirement for this question.