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Cheeseburger and Taco Company purchases 7,492 boxes of cheese each year. It costs $18 to place...

Cheeseburger and Taco Company purchases 7,492 boxes of cheese each year. It costs $18 to place and ship each order and $3.05 per year for each box held as inventory. The company is using Economic Order Quantity model in placing the orders. What is the average inventory held during the year?

Round the answer to the whole number

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Answer #1
Economic order quantity = ((2*A*O)/C)^(1/2) Where,
= ((2*7492*18)/3.05)^(1/2) A = Annual demand =           7,492 Units
=              297 Units O = Ordering cost per order = $             18 per order
C = Carrying cost per unit = $         3.05 per unit
Average inventory = 1/2*(Economic order quantity)
= 1/2*(297)
=              149 units
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