Question: Problem 3. (Deterministic Inventory Model. Total 15 pts.) David's Delicatessen sells a special Hebrew sausage. The owner, David Gold, estimates that the demand for the

 Problem 3. (Deterministic Inventory Model. Total 15 pts.) David's Delicatessen sells

Problem 3. (Deterministic Inventory Model. Total 15 pts.) David's Delicatessen sells a special Hebrew sausage. The owner, David Gold, estimates that the demand for the sausage is steady at 5000 kilograms a month. The special sausage cost Gold $5.00 a kilogram. The cost of ordering and shipping from the supplier is $150 each order. Gold's accountant, Irving Wu, estimated an annual holding cost of the sausage is 25% of the sausage purchase cost. a) How many kilograms of the special sausage should Gold order each time to minimize the annual costs on holding and ordering? Calculate the annual total costs of holding, ordering, and purchasing the sausage. b) What is the maximal inventory level, average inventory level? How many times will Mr. Gold order each year? c) At what inventory level should Mr. Gold's Reorder assuming that it will take half of a month to receive an order? d) Recently, Mr. Gold received the following offer from his supplier: If Gold can change his order quantity to order once a month, his shipping cost will be reduced by $50. Should Gold accept the offer

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