Tiger Corporation purchases 1,200,000 units per year of one component. The fixed cost per order is $25.

Question:

Tiger Corporation purchases 1,200,000 units per year of one component. The fixed cost per order is $25. The annual carrying cost of the item is 27% of its $2 cost.

a. Determine the EOQ under each of the following conditions: (1) no changes, (2) order cost of zero, and (3) carrying cost of zero.

b. What do your answers illustrate about the EOQ model? Explain.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...