Demand for a certain electrical component is $1000$ per month.

Westside incurs fixed order placement, transportation and receiving cost of $$25$ each time order is placed

Each component costs Westside $$2\mathrm{.}50$

Retailer has holding cost of $20\%$

Find number of components in each replenishment lot.

Assume $250$ working days. $1.$Why do you think the convenient lot size is better in this case?

$2.$If the monthly demand increases to $4000$ units per month, what is the change in new Q$*?$

$3.$Select the correct relationship which$$describes how demand increases impacts optimal order size: