Sub: Finance Topic: Economic Order Quantity
Computing Economic order quantity for inventory for minimizing costs
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A beer distributor finds that it sells on average 100 cases a week of regular 12-oz. Budweiser. For this
problem assume that demand occurs at a constant rate over a 50-week year. The distributor currently
purchases beer every two weeks at a cost of $8 per case. The inventory-related holding cost (capital,
insurance, etc.) for the distributor equals 25 percent of the dollar value of inventory per year. Each order