Question: The University Bookstore at Tech stocks the required textbook for
The University Bookstore at Tech stocks the required textbook for Management Science 2405. The demand for this text is 1,200 copies per year. The cost of placing an order is $350, and the annual carrying cost is $2.75 per book. If a student requests the book and it is not in stock, the student will likely go to the privately owned Tech Bookstore. It is likely that the student will not buy books at the University Bookstore in the future; thus the shortage cost to the University Bookstore is estimated to be $45 per book. Determine the optimal order size, the maximum shortage level, and the total inventory cost.
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