Question
The Taco Tango Truck uses 9,600 disposable cups per year. The cups are purchased at $.16 each. Annual carrying costs per cup are estimated to
The Taco Tango Truck uses 9,600 disposable cups per year. The cups are purchased at $.16 each. Annual carrying costs per cup are estimated to be 20 percent of cost, and ordering costs are $15 per order. The manager has been using an order size of 800 cups to place an order once per month.
The total annual cost of the current inventory policy is $193.
The owner of Taco Tango Truck learned about the concept of the Economic Order Quantity, and calculated his EOQ to be 3000 cups (rounded to a whole number).
How much can the owner save on the annual costs of holding and ordering cups, if he uses the EOQ to place orders?(Enter your answer as a whole number. Omit the "$" sign in your response.)
Annual savings$
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