A firm uses 6000 tonnes of commodity x every year the fixed, Microeconomics

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A firm uses 6000 tonnes of commodity x every year the fixed

Question: 1. A firm uses 6,000 tonnes of commodity X every year. The fixed transaction costs involved with each order are £80. Each tonne of X held in stock costs £6 per annum. How many separate orders for X should the firm make during the year?

2. If each order for a batch of components costs £700 to make, storage costs per annum per component are £20 and annual usage is 4,480 components, what is the optimal order size?

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