Retailer incurs an annual inventory carrying rate

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An on-line retailer sells 12,000 pairs of shoes each month. A pair of shoes costs $50 on average, and the retailer incurs an annual inventory carrying rate of 52 percent.

a) For what value of fixed cost per order would an order size of 8,000 units per replenishment would be optimal?

b) For what value of fixed cost per order would an order size of 2,000 per replenishment would be optimal?

Reference no: EM13991747

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