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Annual Demand(D)=20,000 units
Ordering Cost(S)= $40 per order
Purchase Price(P)= see table
Holding Rate(I)=20%
Quantity Q Purchase Price P
1 – 499 $20
500 – 999 $18
1000 and more $17
1- Calculate the optimal feasible order quantity EOQ.
2- Calculate corresponding total annual cost and determine: How many units should be purchased with each order?
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