Discount-Mart (see Problem 16.5), as part of its new JIT program, has signed a long-term contract with

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Discount-Mart (see Problem 16.5), as part of its new JIT program, has signed a long-term contract with Specialty Lighting and will place orders electronically for its halogen lamps. Ordering costs will drop to $.50 per order, but Discount-Mart also reassessed its carrying costs and raised them to $20 per lamp.

a) What is the new economic order quantity?
b) How many orders will now be placed?
c) What is the total annual cost of managing the inventory with this policy?

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Operations Management

ISBN: 978-0133408010

11th edition

Authors: Jay Heizer, Barry Render

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