Question: Consider a basic economic order quantity (EOQ) model with the following characteristics: Item cost............$15 Item selling price.........$20 Monthly demand.........500 units (constant) Annual holding cost.......9% of

Consider a basic economic order quantity (EOQ) model with the following characteristics:

Item cost............$15

Item selling price.........$20

Monthly demand.........500 units (constant)

Annual holding cost.......9% of purchase cost

Cost per order..........$18

Order lead time........5 days

Firm's work year.........300 days (50 weeks @ 6 days per week)

Safety stock..........15% of monthly demand

The optimal Order Quantity, Q* is

a. 115

b. 223

c. 400

d. 1549

e. None of the above


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