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Computation of total setup and carrying costs associated with the Economic Order Quantity.
Benoit Corporation produces lawn chairs. In order to produce the frames for the furniture, special equipment must be set up. The setup cost per frame is $50. The cost of carrying frames in inventory is $4 per frame per year. The company produces 10,000 lawn chairs per year. Compute the number of frames that should be produced per setup in order to minimize total setup and carrying costs. Compute the total setup and carrying costs associated with the economic order quantity?
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