curve which is where the ordering and holding cost curves intersect they equal

# Curve which is where the ordering and holding cost

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curve, which is where the ordering and holding cost curves intersect (they equal). d) TC 380 = Difference between TC 380 and TC 344 = \$345.37 \$343.63 = \$1.74 The difference between the current order size and the optimal order quantity is 380-344 = 36 packages and the total annual cost of ordering and holding the 380 boxes is \$345.37, which is only \$1.74 more expensive than the optimal order quantity’s total cos t. Therefore, the difference of \$1.74 per year is not big enough to suggest that the office manager should change his current order size (only \$1.74 higher than with EOQ, so 380 is acceptable). 2. Expected annual demand = 800 boxes/month * 12 months = 9600 boxes/year For Supplier A: Annual holding cost: Quantity (1-199) : \$14.00*25% = \$3.50 Quantity (200-499) : \$13.80*25% = \$3.45 Quantity (500+) : \$13.60*25% = \$3.40 EOQ (1-199) = 468.43 (not feasible, adjust to 199)