7. A large distributor of oil well drilling equipment operated over the past two yeafs with EOQ policies based on an annual holding cost rate of 22%. Under the EOQ policy, a par- ticular product has been ordered with a o 80.
A recent evaluation of holding costs shows that because of an increase in the interest rate associated with bank loans, the an- nual holding cost rate should be 27%.
a. at is the new economic order quantity for the product? b. Develop a general expression showing how the economic order quantity changes when the annual holding cost-rate is changed from I to l