Question: You are the inventory control manager for a large firm. At the annual planning session, you are setting the inventory policy for your major items.

You are the inventory control manager for a large firm. At the annual planning session, you are setting the inventory policy for your major items. While doing this, you realize that it is difficult to accurately estimate the actual cost for placing an order. Therefore, to be on the safer side, you decide to set the actual order quantity at 25% more than the computed economic order quantity.
By how much (in percentage) will the new Total Relevant Cost be different from the optimal ? Enter your answer as a decimal between 0 and 1 with 3 significant digits. For example, for 32.12% enter 0.321.

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