Calculate and report the economic order quantity

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A co?ee shop sells bags of roasted co?ee beans to customers to make into co?ee at home. The demand for these bags is quite predictable (and can be treated as deterministic for our purposes). The shop sells 3,500 bags of co?ee beans per year. Each time the shop places an order for these bags with its co?ee supplier, it incurs an administrative cost of $15, independent of the quantity ordered. The company values each bag at $12.50 (this is the book value, not the selling price), and the company’s inventory carrying rate is 15% per year. Assume that the lead time is zero, i.e., orders are received immediately when they are placed.

Question- Calculate and report the economic order quantity (EOQ)

Reference no: EM132245171

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