Question: A building materials supplier obtains its bagged cement from a single supplier. Demand is reasonably constant throughout the year and last year the company sold

A building materials supplier obtains its bagged cement from a single supplier. Demand is reasonably constant throughout the year and last year the company sold

2000

tons of this product. It estimates the costs of placing an order at around

25

each time an order is placed and the annual cost of holding inventory is

20 %

of the purchase cost. The company purchases the cement at

60

per ton.

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