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You are the purchasing manager and you buy a raw material having the following information: Annual demand = 900 units Fixed order quantity = 260

You are the purchasing manager and you buy a raw material having the following information:

  • Annual demand = 900 units
  • Fixed order quantity = 260 units
  • Order cost = $100 / order
  • Inventory carrying cost = 25%
  • Per unit purchase cost = $10 / unit
  • Safety stock = 30

On average, what is the dollar value of inventory that you will have for this material?

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