The data is D = 50,000/year, S= $500 per order, H = $0.25 per unit per year. Assume a lead time of 3 days.

Fill in the following table. Write out the formulas you are using.

Annual demand
Holding cost (units per year)
Ordering cost
Ordering quantity (EOQ)
Number of orders per year
Average inventory
Maximum inventory
Reorder level
Length of order cycle
Annual holding cost
Annual ordering cost
Annual Affected Inventory Cost

b. Suppose a mistake was made in the data and the correct data is D = 60,000 per year, S = $400 per order, H = $0.20 per unit per year. Calculate the correct EOQ and affected inventory cost.
c. Now suppose we used the incorrect EOQ (based on the first set of data) instead of the correct EOQ. Calculate the affected inventory cost.
d. Compute the percentage error in the EOQ and in the inventory cost.
e. Moral of the story is that incorrect estimation of costs or demand (does or does not) result in substantial deviation from the optimal cost (circle the right answer).