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When is the ordering cost decreased?
Ordering cost falls while the size of order increases. It is because when the size of order raises for the similar quantity of inventory purchased annually, in that case less orders and thus administration cost would be needed for example, staff, phone calls and paperwork etc.
Stan's company is considering producing a gear assembly that it now purchases from Sal Company. Salt company charges 4 per unit with a minimum order of 3000 units. Stan estimates t
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