JL.81 As a result of many process improvements and ITimplementations (like EDI), Big Box-Mart has been able to reduceits order costs from $18.17 to $5.09 when purchasing cases of papertowels from its main paper-products supplier. Annual demand isexpected to be 164,000 cases and annual holding costs are $19.56per case.
Hint #1: This is a purchasing order quantity problem (EOQ), not aproduction order quantity problem. For this question we arecombining a JIT concept (lower ordering costs) with what youlearned from a previous chapter (inventory management). Ifnecessary, refer back to that chapter.
Hint #2: Remember to use cell references in all your formulasrather than using a rounded input value from a previouscalculation.
Based on this information, what will be the new optimal orderquantity (using the reduced ordering cost)? (Display your answer tothe nearest whole number.)
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When using the reduced ordering cost, as compared to the originalordering cost, by how many cases will the average inventory godown? (Display your answer to the nearest wholenumber.)
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What will be the annual total combined savings to ordering costsand holding costs when using the reduced order cost, as compared tothe original ordering cost? (Display your answer totwo decimal places.)
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