Question: The demand for a product is 600 units per week

The demand for a product is 600 units per week, and the items are withdrawn at a constant rate. The setup cost for placing an order to replenish inventory is $25. The unit cost of each item is $3, and the inventory holding cost is $0.05 per item per week.
(a) Assuming shortages are not allowed, determine how often to order and what size the order should be.
(b) If shortages are allowed but cost $2 per item per week, determine how often to order and what size the order should be.

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  • CreatedSeptember 22, 2015
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