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You are a retailer selling a certain item. Demand is for 887 per year. The supplier charges $15.00 per unit plus a processing fee of

You are a retailer selling a certain item. Demand is for 887 per year. The supplier charges $15.00 per unit plus a processing fee of $3.80 per order. Each order costs the retailer $11.90 in adminstrative overheads. The effective interest rate on capital tied up in stock is 4.0%. No shortages should occur.

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