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The owner of a health food store has decided to intentionally allow shortage of a food supplement. The annual demand is 500 bottles, the ordering cost is $10 per order, and the holding cost is $1 per bottle per year. Cost of back-ordering one bottle is estimated to be $10 per bottle per year.
a. What should be the order quantity? (Round the final answer to the nearest whole number.)
Order Quantity units
b. How many bottles should be short per order cycle? (Round the final answer to the nearest whole number.)
Bottles short per order cycle units
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