Question: A store manager wants to establish an optimal inventory policy for an item. Sales are expected to be at a steady rate and should total

A store manager wants to establish an optimal inventory policy for an item. Sales are expected to be at a steady rate and should total Q items sold during the year. Each time an order is placed a cost of h dollars is incurred. Carrying costs for the year will be s dollars per item, to be figured on the average number of items in storage during the year. Show that the total inventory cost is minimized when each order calls for √2hQ/s items.

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