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Assume that Palmer Executive Pens uses 1,440,000 gallons of ink each year. Further, assume that Palmer can order the ink at a cost of $2
Assume that Palmer Executive Pens uses 1,440,000 gallons of ink each year. Further, assume that Palmer can order the ink at a cost of $2 per gallon plus fixed ordering costs of $100 per order. The firm's carrying cost is 20 percent of the inventory value at cost. A) What is the firms EOQ? B) Now, suppose the manufacturer offers a discount of 0.5 percent for orders of at least 40,000 gallons. Should Palmer increase its ordering quantity to take the discount
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