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3 A company requires a particular item from an outside supplier for its production process. Annual demand for the item is 3000 units. Order costs

3 A company requires a particular item from an outside supplier for its production process. Annual demand for the item is 3000 units. Order costs are estimated at 15 and holding costs at 20 per cent of the purchase price of the item, which is 5.50 per unit. (a) Determine the optimum (economic) order quantity. (b) What are the critical assumptions behind this calculation

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