OWL Question for Quiz #20: Module 10 Problems 140 PM Question Status AIA Inc is looking...

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Answer 1

Answer #1

Please provide rating..

EOQ = square root of (2* annual consumption*transaction cost/Interest rate)


Annual consumption	=5500*365	2007500
Transaction cost		150
Interest rate		2.10%


EOQ =		=square root of (22007500150/2.1%)

EOQ =		169347

Average cash balance = 169347/2		84,673.74

Therefore storage cost = 84673.74*2.1%		1,778.15

Number of transaction = 2007500/169347		11.85

Transaction cost = 11.85*150		1,778.15

Total cost = 1778.15+1778.15		3,556.30

Answer 2

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