9.p Environmental considerations, material losses, and waste disposal can be included in the EOQ model to improve inventory management decisions. Assume that the annual demand for an industrial chemical is 1,200 lb, item cost is $5/lb, order cost is $40, and the inventoryholding cost rate (percent of item cost) is 18 percent.
a. Find the EOQ and total cost, assuming no waste disposal.
b. Now assume that 8 percent of the chemical is not used and is disposed of, with a disposal cost of $0.75/1b. Find the EOQ and total cost when disposal costs are incorporated into the
(Hint: Add to the holding cost the disposal cost times the percent of product that is disposed of.)
c. What implications do these results have for sustainability practices?