Scenario 9.5 Tom Bergman, Owner and Operator of the Earplug Superstore, Is

Multiple Choice

Scenario 9.5
Tom Bergman, owner and operator of the Earplug Superstore, is reviewing the costs associated with the store's best-selling hearing aid, the BZ15. The data available to Dr. Bergman concerning this device follow.
Demand = 25 units/week
Order cost = $3/order
Holding cost = $1.50/unit/year
The Earplug Superstore operates 52 weeks a year.
-Use the information in Scenario 9.5. If Tom orders a one-year supply at a time, how much higher are his total (ordering and holding) costs compared to total costs incurred if he ordered at his EOQ?

A) less than or equal to $600
B) greater than $600 but less than or equal to $700
C) greater than $700 but less than or equal to $800
D) greater than $800