Software EG, a retail company, orders two kinds of software from Tele-Hard Software. Annually, Software EG sells
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Software EG, a retail company, orders two kinds of software from Tele-Hard Software. Annually, Software EG sells 800 units of product 1 and 400 units of product 2. The unit purchasing cost is $30 per unit of product 1 and $25 per unit of product 2. It costs $5 to store a unit of either product for a year. The cost of placing an order for either product separately or both products together is $100. Software EG’s annual cost of capital is 14%. Determine a cost-minimizing ordering policy.
Cost Of CapitalCost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...
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