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How much lower would the annual cost be

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Question - X inc. use one raw material type in its manufacturing process. It need 3,750 kilos of this material each month. It incurs P500 each time when making and receiving orders. Annual carrying cost per unit costs P15 in warehousing and P5 in financing costs. If X purchases 1000 kg each time, how much lower would the annual cost be if X would now follow the EOQ model?

Reference no: EM133127883

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