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For supply item HM, Bertha Company has been ordering 130 units based on the recommendation of the salesperson who calls on the company monthly. The company has hired a new purchasing agent, who wants to start using the economic-order-quantity method and its supporting decision elements. She has gathered the following information:
Annual demand in units 500
Days used per year 500
Lead time, in days 30
Ordering costs $125
Annual unit carrying costs $20
Determine the EOQ, average inventory, orders per year, average daily demand, reorder point, annual ordering costs, and annual carrying costs.
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