Question
(EOQ calculations) A downtown bookstore is trying to determine the optimal order quantity for a popular novel just printed in paperback. The store feels that
(EOQ
calculations)
A downtown bookstore is trying to determine the optimal order quantity for a popular novel just printed in paperback. The store feels that the book will sell at four times its hardback figures. It would, therefore, sell approximately
4 comma 0004,000
copies in the next year at a price of $1.50. The store buys the book at a wholesale figure of $1. Costs for carrying the book are estimated at
$0.250.25
a copy per year, and it costs
$1010
to order more books.a. Determine the
EOQ.
b. What would be the total costs for ordering the books 1, 4, 5, 10, and 15 times a year?
c. What questionable assumptions are being made by the EOQ model?
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