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Calculate the optimal size of an order

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Hull Baking Company uses 250,000 lb of sugar annually in its cakes and pastries. The company can order the sugar in 100 lb bags, at the cost of $19.50 per bag, delivered. The cost of preparing and sending an order is $50. The storage and handling costs amount to $2 per bag per year, based on average inventory. The cost of capital for Hull is 12%. Calculate the optimal size of an order.

Reference no: EM131181465

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