Final answer:
The Economic Order Quantity (EOQ) can be calculated using the EOQ formula. Total cost can be found by calculating the ordering cost and holding cost separately.
Step-by-step explanation:
The Economic Order Quantity (EOQ) can be calculated using the formula:
EOQ = √(2DS/H)
Where D is the annual demand (5000), S is the ordering cost (Rs. 250), and H is the holding cost (10% of the price of a unit).
To find the total cost, we need to calculate the ordering cost and holding cost separately and then sum them.
The ordering cost is calculated by dividing the annual demand by the EOQ and multiplying it by the ordering cost per order.
The holding cost is calculated by multiplying the EOQ by the holding cost per unit.
If the EOQ increases by 10%, the new EOQ can be calculated by multiplying the original EOQ by 1.1.
To find the change in total cost, we subtract the original total cost from the new total cost.l