V-Fuel Aircraft is a limited service fixed-base operator (FBO) owned and operated by V-Fuel Inc. The company handles a variety of major functions at Wilkes-Barre/Scranton International Airport, such as aircraft fueling, maintenance, and flight instruction, and is likely to continue doing so for the foreseeable future. V-Fuel has collected the following information on one of its products:

a. What is the total cost of ordering and holding if the firm currently requires 500 units per order?

b. What is the EOQ? C.

d. e.

f. Determine the cost of ordering and holding goods using the EOQ. Form the ratio of the order quantities under the old policy and EOQ. Form the ratio of the EOQ to the old order quantity. Form the ratio of the company's total system costs under the two ordering policies. Average these two ratios and compare this number with the ratio of the old total cost with the total cost under an EOQ policy.