Shoe shine is a local retail shoe store located on the north side of centerville. annual demand for a popular sandal is 500 pairs, and john dirk, the owner of shoe shine, has been in the habit of ordering 100 pairs at a time. john estimates that the ordering cost is $10 per order. the cost of the sandal is $5 per pair. for john's ordering policy to be correct, what would the carrying cost as a percentage of the unit cost have to be? if the carrying cost were 10% of the cost, what would the optimal order quantity be?

The optimal order will be of 100 units

Explanation:

We will solve this using the EOQ (economic order quantity) formula:

D = annual demand500 units

S= setup cost = ordering cost = 50.00 dollars

H= Holding Cost = 5.00 dollars

EOQ = 100

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