In the text, a dynamic programming matrix was developed and set forth.

Two items were involved, PI and P2. The objective was to minimize the total cost, TC, of these two items, subject to a budgetary restriction.

Extend this example to three items as follows:

C.

C, P

$2.00

.10

$4 10 Pa 5.00 10 4

16 P

20.00

.10 4

4

(a) If the budget allows an average dollar inventory of $100, what is the optimal allocation of the budget among the items ?

(b) If the budget is fixed at $50, what is the optimal allocation among the items ?