Question: When D the demand rate is 50 per unit per month, K the fixed ordering cost is USD100 and h the holding cost is USD2.5

When D the demand rate is 50 per unit per month, K the fixed ordering cost is USD100 and h the holding cost is USD2.5 per unit per week.

a. Find the equation for the average total cost per unit time for such inventory system with varying order quantity Q. State all your assumptions carefully.

b. What is the Economic order quantity Q for a simple continuous review policy? State all your assumptions carefully. Conduct a Sensitivity Analysis to illustrate the deviation from the EOQ in the range of plus or minus 30%, in 10%-steps.

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