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A Firm Has Order-Processing Costs of $8, an Annual Demand

Question 118

Multiple Choice

A firm has order-processing costs of $8, an annual demand of 4,000 units, holding costs equal to 20 percent of the average inventory on hand, and wholesale unit costs of $2. What is its economic order quantity?


A) 10 units
B) 200 units
C) 400 units
D) 1,000 units

Correct Answer:

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