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    EOQ Analysis

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    Tiger Corporation purchases 1,200,000 units per year of one component. The fixed cost per order is $25. The annual carrying cost of the item is 27% of its $2 cost.
    a) Determine the EOQ under each of the following conditions: (1) no changes (2) order cost of zero, and (3) carrying cost of zero.

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    Solution Preview

    EOQ = SQRT[(2 x demand x ordering cost / carrying cost)]

    1) no changes = sqrt(2 x 1,200,000 x 25 / 27%*$2)

    = ...