The bathroom section of a large department store sells 18,233 specialty bath towels per year. The unit purchase cost of a towel from the store’ supplier is $2.40 per towel. The cost of placing an order to the supplier is $14.00 per order. The holding cost is $0.60 per towel per year. Assume that the Economic Order Quantity (EOQ) Model is appropriate here, and that EOQ = 922.43.
a. What is the total annual setup (i. e., order) cost?
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