Question: A commodity is to be supplied at a constant rate of 25 units per day. A penalty cost will be charged at a rate of

A commodity is to be supplied at a constant rate of 25 units per day. A penalty cost will be charged at a rate of Rs 10 per unit per day, if it is late for missing the scheduled delivery date. The cost of carrying the commodity in inventory is Rs 16 per unit per month. The production process is such that each month (30 days) a batch of items is started and is available for delivery any time after the end of the month. Find the optimal level of inventory at the beginning of each month.

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