A spice store orders 4800 pounds of black pepper per year

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A spice store orders 4800 pounds of black pepper per year. The store purchases each pound at a cost of $10. Management of the store has estimated the annual holding cost at $2 per pound. The cost of placing an order is $20.

a. If management orders once per month, what is the current total (ordering + holding + purchase) cost per year?

b. Determine EOQ for this problem.

c. How much would the firm save annually if the EOQ were used?

Reference no: EM13389647

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