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Rocky Mountain Tire Center sells 12,000 go-cart tires per year. The ordering cost for each order is $40, and the holding cost is 30% of the purchase price of the tires per year. The purchase price is $21 per tire if fewer than 200 tires are? ordered, $19 per tire if 200 or more, but fewer than 5,000 tires are? ordered, and $13 per tire if 5,000 or more tires are ordered.
a) How many tires should Rocky Mountain order each time it places an order?
Rocky Mountain's optimal order quantity is ___ units (enter your response as a whole number).
b) What is the total cost of this policy?
Total annual cost of ordering optimal order size = $_____ (round your response as a whole number).
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Now use the analytical version of the Excel template for the basic EOQ model (which applies the EOQ formula directly) to find the optimal quantity.
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