A bicycle manufacturer buys 5000 tires a year from a distributor. It cost 6 to store one bicycle tire for a year.

A bicycle manufacturer buys 5000 tires a year from a distributor. It cost 6 to store one bicycle tire for a year. To re-order, there is a fixed cost of $24 per shipment plus $11 for each tire. How many times per year should the manufacturer order bicycle tires and in what lot size, to minimize inventory cost?

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milcah answered 1 year ago

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