(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?