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Ruler Inc. is the distributor of a very popular brand of rulers that it sells for $1.25 per pack. Ruler Inc. sells 500 packs per week. It orders the rulers from Measurement Manufacturers (MM). MM sells packs to Ruler Inc. at $0.50 per pack and charges a flat fee of $20 per order for shipping and handling. Ruler’s annual inventory holding cost percentage is 25 percent.
1) What is the economic order quantity (EOQ)?
2) If Ruler Inc. orders 1000 packs with each order, what is the sum of Ruler’s ordering and holding costs per year?
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