Answer Happy

Newstar Foods is a company manufacturing cereal. It has an
annual demand for two flavors: Strawberry cereal and Blueberry
cereal of 592,600 and 608,030 boxes respectively. Each box
contains 18 ounces of cereal, and exactly half of the weight of the
cereal comes from its fruit (strawberry or blueberry), and both
fruits are imported from Japan. Newstar Foods has computed its
ordering cost as US$60 per order. They pay their Japanese
supplier 12.5 US cents per pound (there are 16 ounces in a pound)
of strawberry and 10 cents per pound of blueberry. The annual
holding cost of either fruit is 20% of the value of the
fruit.
If you combine orders for each fruit into one monthly order (in
other words, instead of using the EOQ policy, we will just send out
one single monthly order combined for both fruits), it will still
only cost $60 for the combined order.
What is the annual savings in total fixed order and inventory
holding costs, compared to the separate EOQ policy for each fruit
earlier?
Group of answer choices
$570 savings
No savings
$250 cost increase
$554 savings
$400 cost increase
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