Zainab Opens an Aquarium Store in a Lively Shopping Mall

Multiple Choice

Zainab opens an aquarium store in a lively shopping mall and finds business to be booming, but she often stocks out of key items customers want. She decides to experiment with inventory control methods such as using a fixed order quantity (FQS) and/or fixed order period (FPS) systems. The Fluval 303 pump, a high margin and profitable pump, is one of her best sellers, but it stocks out frequently. She collects the following data with respect to this pump's sales:
$\begin{array} { l l } \text { Demand } = 5 \text { units per week } & \text { Store operates } 50 \text { weeks } / \text { year } \\\text { Order cost } = \$ 40 / \text { order } & \text { Lead time } = 3 \text { weeks } \\\text { Item cost } = \$ 80 / \text { pump } & \\\text { Inventory-holding cost } = 15 \% \text { per year } &\end{array}$
-If the current order quantity used by Zainab is 20 pumps per order, how much money can she save by adopting an economic order quantity (EOQ) policy?

A) Less than $50
B) More than $50 but less than or equal to $75
C) More than $75 but less than or equal to $120
D) More than $120