A company has overestimated its annual demand for an item by 50% and underestimated its ordering cost
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Question:
A company has overestimated its annual demand for an item by 50% and underestimated its ordering cost by 20%.
a. By what percentage (of the economic order quantity) will the order quantity be too large? Express your answer as a percent with 2 decimal places.
b. By what percentage (of the total relevant costs) will total relevant costs be too high? Express your answer as a percent with 2 decimal places.
Expert Answer:
a To calculate the percentage by which the order quantity will be too large we can use the concept o... View the full answer
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