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Explain the facts on which Economic Order Quantity is depend
Economic Order Quantity depends on two costs:
(i) Inventory procurement costs which consists of expenditure connected with
* Obtaining quotations
* Processing Purchase Requisitions
* Expediting and Following up Purchase order
* Receiving materials and after that inspecting them Processing Invoices Procurement costs of seller reduce as the order quantity raises.
(ii) Carrying Costs that vary with quantity ordered contains
* Interest on capital investment
* Cost of storage services
* Cost including deterioration and obsolescence
* Cost of insurance and property tax etc.
Carrying costs are approximately directly proportional to the order size or lot size quantity.
You have been working for some time at UMUC Pizza, a pizza restaurant located near the UMUC campus. The owner, Bill, is very interested in expanding his successful business. He h
advantages of simple regression method for cost estimation.
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