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Satriale uses 145,600 switches per year (or 2,800 per week) andcurrently orders 2,800 weekly (assume they are deliveredimmediately). If the carrying cost per switch is $6.20 and thefixed order cost is $1,200, is the company’s inventory policyoptimal? What is the economic order quantity they should use? Howmuch money will they save by changing their ordering behavior tothat quantity compared to what they are spending now?
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