Tiger Corporation purchases 1,360,000 units per year of one component. The fixed cost per order is $55. The annual carrying cost of the item is 27.6% of its 9.71 cost.

a. Determine the EOQ if (1) the conditions stated above hold, (2) the order cost is $1.00 rather than $55 and (3) the order cost is $55 but the carrying cost is 0.01

b.What do your answers illustrate about the EOQ model? Explain.