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You are a purchasing manager for your company. You know that your monthly demand is 20,000 units. You estimate that your fixed ordering cost is $450 and the annual holding cost percentage is 15%. You sell the product for $80 and each unit is marked up $50 from the unit cost. (Round order quantities to whole numbers and cost values to 2 decimals)
(1) If you have one warehouse to store the inventory
a. What is the economic order quantity (EOQ) for the product?
b. What is the annual total cost (holding and setup) for having one warehouse?
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