A. Find the optimal order quantity
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:3. 3.Each year, 20/20 Vision Clinic sells 10,000 frames for eyeglasses. The clinic orders frames from a
regional supplier, which charges $25 per frame. Each order incurs an ordering cost of $60. 20/20 vision
believes that the demand for frames can be backlogged and that the cost of being short one frame for
one year is $15 (because of loss of future business). The annual holding cost for inventory is 20% of
the dollar value of each frame.
A. Find the optimal order quantity
B. Find the maximum shortage and maximum inventory level.
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