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EOQ calculation. The demand for toilet paper in a convenience store occurs at the rate of 1 0 0 packets per month. Each packet contains
EOQ calculation. The demand for toilet paper in a convenience store occurs at the rate of packets per month. Each packet contains a dozen rolls and costs $ Assume the order placement cost to be $ per order and the holding cost rate to be Take one month to be the equivalent of four weeks.
a Determine the optimal order quantity, reorder interval, and optimal cost using the EOQ model.
b Suppose now that backordering of demand is allowed in the situation described in the previous question. The cost of backordering is $ packetyear Use the EOQ model with backordering to determine the optimal order quantity, maximum backlog allowed, and optimal average annual cost.
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