Given the data below for three products $($with a carrying charge

of $0\mathrm{.}2$ $$/$unit$/$yr$),$ and assuming that a delivery is possible every

day $($assume $365$ days per year$),$ what would be the order

quantities for each product using the power$-$of$-$two policy?

In addition to the individual setup cost, there is also a $$2,000$

truck cost that can be shared between products if they are

ordered at the same time.

Product

Annual demand

Individual setup cost

Unit cost

X

$200,000$

$$1,200$

$$20$

Y

$1,000,000$

$$1,100$

$$30$

Z

$180,000$

$$1,120$

$$50$