Henry Crouch's law office has traditionally ordered ink refills 55 units at a time. The firm estimates that carrying cost is 40% of the $12 unit cost and that annual demand is about 240 units per year. The assumptions of the basic EOQ model are thought to apply. For what value of ordering cost would its action be optimal? a) For what value of ordering cost would its action be optimal? Its action would be optimal given an ordering cost of $30.25 per order (round your response to two decimal places). b) If the true ordering cost turns out to be much less than your answer to part (a), what is the impact on the firm's ordering policy? OA. The order quantity should be increased. B. The order quantity should be decreased. O C. The order quantity should not be changed.

Henry Crouch's law office has traditionally ordered ink refills 55 units at a time. The firm estimates that carrying cost is 40% of the $12 unit cost and that annual demand is about 240 units per year. The assumptions of the basic EOQ model are thought to apply. For what value of ordering cost would its action be optimal? a) For what value of ordering cost would its action be optimal? Its action would be optimal given an ordering cost of $30.25 per order (round your response to two decimal places). b) If the true ordering cost turns out to be much less than your answer to part (a), what is the impact on the firm's ordering policy? OA. The order quantity should be increased. B. The order quantity should be decreased. O C. The order quantity should not be changed.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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