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Ekor bakery sells doughnut. The annual demand is 10,000 per year. The ordering cost is $21, and holding cost is $3. If the demand
Ekor bakery sells doughnut. The annual demand is 10,000 per year. The ordering cost is $21, and holding cost is $3. If the demand exceeds the inventory, Ekor has two types of costs associated with the backorder. The loss of goodwill is $0.1 per unit short, and a "bookkeeping" cost of $0.3 per unit short per year. Calculate: economic order quantity, maximum acceptable inventory, cycle time, and minimal total annual average cost. (7 points) Suppose the doughnuts are sold in packages of 150 units each. How many packages should sell? (Hint: Sensitivity of EOQ). (3 points)
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