Consider an inventory system that fits the model for a serial two-echelon system presented in Sec. 18.5, where K1 = $15,000, K2 = $500, h1 = $20, h2 = $22, and d = 5,000. Develop a table like Table 18.1 that shows the results from performing both separate optimization of the installations and simultaneous optimization of the installations. Then calculate the percentage increase in the total variable cost per unit time if the results from performing separate optimization were to be used instead of the results from the valid approach of performing simultaneous optimization.
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