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3. Eric Clothing Limiteds annual demand for materials X is 50 000 units, and the ordering cost is P10 000 per order and each unit

3. Eric Clothing Limiteds annual demand for materials X is 50 000 units, and the ordering cost is P10 000 per order and each unit costs P3 000. The estimated cost of holding unit of stock is 15% of the purchase cost.

Required:

a. Calculate the economic order quantity (EOQ) and; (4 marks)

b. Calculate the total annual costs of material X. (4 marks)

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