1. A retailer distributes 100,000 kilograms of sugar each year. We buy one kilogram at the price of $2.25. The management calculates the cost of ware- housing and insurance (holding cost) is 20% of the buying price. The firm also incurs an acquisition cost (e.g., transportation cost) of $25 in each order.
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3. How many kilograms should be ordered in each order to keep the costs at minimum?

Answer rating: 100% (QA)

To determine the optimal order quantity that minimizes costs we can use the Economic Order Quantity ... View the full answer