Question: Consider the same retail environment as above. Assume that the retail shop has two types of consoles. The first type has Demand = 1400 per

Consider the same retail environment as above. Assume that the retail shop has two types of consoles. The first type has

Demand = 1400 per year; Cost per unit = $400; holding cost = 10% of the unit cost/per year; Ordering cost = $600 per order

The second type has

Demand = 1000 per year; Cost per unit = $500; holding cost = 10% of the unit cost/per year; Ordering cost = $600 per order

The manager wants to aggregate the two products for joint shipping. The combined ordering cost = $800 per order.

  1. Estimate the optimal number of joint orders per year.
  2. Find the order quantities for both the products.

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