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Working with the Economic Order Quantity (EOQ)

Demand for the Executive DeskPro Computer at Buy More is 1,000 units per month. Buy More incurs a fixed order placement, transportation, and receiving costs of $4,000 each time an order is placed. Each computer costs Buy More $500, and the retailer has a holding cost of 20%.

Evaluate the number of computers the store manager should order in each replenishment lot.

What would the EOQ model recommend if an inventory item has a high usage rate and is expensive? 

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