Demand for a book at Amazon. com is 250 units per week. The product is supplied to the retailer from a factory. The factory pays $ 10 per unit, while the total cost of a shipment from the factory to the retailer when the shipment size is Q is given by
Shipment cost = $ 50 + 2Q
Assume the annual inventory carrying cost is 20 percent.
a. What is the cost per shipment and annual holding cost per book?
b. What is the optimal shipment size?
c. What is the average throughput time?