Question
A store order bottles of shampoo throughout the year. Over time, the store has learned that the annual demand D for shampoo is constant, i.e.,
A store order bottles of shampoo throughout the year. Over time, the store has learned that the annual demand D for shampoo is constant, i.e., there is no variability. Currently, the store decides to use the optimal EOQ value Qopt every time they order a new shipment of shampoo bottles from their supplier. Assume that the annual total cost TC(Qopt) incurred by the store is $5,000.
How much does the store pay each year in holding costs (i.e., what is the annual holding cost)?
If the store ordered 2Qopt bottles every order as opposed to Qopt bottles, then what would be the annual total cost incurred?
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