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A large dairy firm, the Cow and Buffalo Company, buys bins every year, which it uses in the warehousing of its bottled products. A local vendor has offered the discount schedule for bins, as given in Table 2:
Order Quantity Unit Price
Up to 699 $10
700 to 949 $9
950 and above $8
The average yearly replacement is 2000 bins. The carrying costs are 12% of the average inventory and ordering cost per order is $100.
Determine:
i. The common EOQ.
ii. The total cost if the feasible minimum point is on the lowest price range that is the optimal order quantity.
iii. The total cost if the feasible minimum point is in any other price range.
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