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A firm uses 1,280 units of a component each year. The cost of making an order is 540 and each component held in stock for
A firm uses 1,280 units of a component each year. The cost of making an order is 540 and each component held in stock for a year costs the firm 6. What average order size would you advise the firm to make? Assume that the demand for this component is steady from year to year and that the same number of orders do not have to be made within each 12-month period.
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