The famous Ernie from Sesame Street continually faces replenishment decisions concerning his cookie supply. The Cookie Monster devours the cookies at an average rate of 200 per day. The cookies cost $0.03 each. Ernie is getting fed up with having to go to the store once a week. His friend Bert has offered to do a study to help Ernie with his problem.

If Ernie is implicitly following an EOQ policy already with his weekly replenishment, what can Bert say about the implicit values of the two missing parameters?

Suppose that Ernie is implicitly following the EOQ policy already with his weekly replenishment, and the store offers a quantity discount such that if Ernie buys 10,000 cookies at a time or more, then it costs $0.02 per cookie. If K = $0.10, what quantity should Ernie regularly purchase if this is the case?