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A large food distributor uses 8000 packing crates each month to pack and ship its goods. The crates are purchased at a cost of $10 each. The annual holding cost for a crate is estimated at 35% of the purchase price. It is estimated that the cost to place an order for the crates is $25. What is the EOQ for this item?
1) What is the EOQ for these crates? (Round your answer to the nearest whole number)
2) If the company used the EOQ, what would be there total cost for ordering and holding these crates? (Round your final answer to the nearest whole number)
3) If the current purchasing manager orders crates once a month, how much money would they save if they switched to the EOQ method of ordering?
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