Question: A company inventories two items. The relevant data for each item are shown in the Table below. Item 1 Item 2 Annual Demand 6 000

A company inventories two items. The relevant data for each item are shown in the Table below.

Item 1 Item 2
Annual Demand 6 000 4000
Per-unit cost $4.00 $3.50
Annual Holding Cost 30% per year 25% per year
Price Per Order $35 $20

Determine the optimal inventory policy if no shortages are allowed and if the average investment in inventory is not allowed to exceed $700.

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