Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is 15 comma 500 units. Southeastern estimates its annual holding cost for this item to be ​$22 per unit. The cost to place and process an order from the supplier is ​$73. The company operates 300 days per​ year, and the lead time to receive an order from the supplier is 3 working days.
Part 2
​a) What is the economic order​ quantity?

321 units ​(round your response to the nearest whole​ number).
Part 3
​b) What are the annual holding​ costs? ​$

enter your response here ​(round your response to the nearest whole​ number).

To solve this problem, we need to determine the annual holding costs using the Economic Order Quantity (EOQ) model. We have already calculated the EOQ, which is 321 units.

### Given Data:
- Yearly demand (D) = 15,500 units
- Annual holding cost per unit (H) = $22
- Order cost (S) = $73
- EOQ = 321 units

### Economic Order Quantity (EOQ) Formula:
\[ EOQ = \sqrt{\frac{2DS}{H}} \]

### Annual Holding Cost Calculation:
The annual holding cost is calculated using the formula:
\[ \text{Annual Holding Cost} = \frac{EOQ}{2} \times H \]

### Plugging in the values:
\[ \text{Annual Holding Cost} = \frac{321}{2} \times 22 \]

\[ \text{Annual Holding Cost} = 160.5 \times 22 \]

\[ \text{Annual Holding Cost} = 3531 \]

Therefore, the annual holding cost is $ \boxed{3531} $ dollars.

Do you want details or have any questions?

Here are five related questions to expand your understanding:
1. How do you calculate the total annual cost of inventory, including both ordering and holding costs?
2. What would happen to the EOQ if the order cost increases?
3. How does the lead time affect the reorder point calculation?
4. Can you explain the significance of the EOQ model in inventory management?
5. How do changes in demand affect the EOQ and the annual holding cost?

**Tip:** When managing inventory, always strive to find a balance between holding costs and ordering costs to minimize total inventory costs.

Learn how to calculate the Economic Order Quantity (EOQ) and annual holding costs for inventory management using a detailed example. This problem involves determining the EOQ and annual holding costs based on demand, holding costs per unit, and order costs per order.

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