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The annual demand for Product P is 300,000 units and an order for new inventory is placed each month. Each order costs $267 to place. The cost of holding Product P in inventory is 10 cents per unit per year. Buffer inventory equal to 40% of one month’s sales is maintained.
Required :The total cost of an ordering policy using the economic order quantityI cannot figure out the calculation for the EOQ….Cost of holding is puzzling why did the examiners put .10 to the power 0.5??
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