(**) Using the same holding and ordering costs as in problem 1, suppose demand for TricoFlexers…

  (**) Using the same holding and ordering costs as in problem 1, suppose demand for TricoFlexers doubles, to 32,000. Does the EOQ also double? Explain what happens.

Problem 1:

1. Additional homework problems are available at www. pearsonhighered.com/bozarth. These problems use Excel to generate customized problems for different class sections or even different students. (* = easy; ** = moderate; *** = advanced)  (*) Pam runs a mail-order business for gym equipment. Annual demand for TricoFlexers is 16,000. The annual holding cost per unit is $2.50, and the cost to place an order is $50. What is the economic order quantity?