Question: You are the operations manager at an electronics store and you re evaluating the inventory management of your basic laptop computer. On average, the electronics
You are the operations manager at an electronics store and youre evaluating the inventory management of your basic laptop computer. On average, the electronics store sells about basic laptop computers each month. Each time you place an order for this type of computer, you incur an order cost of $ and it typically takes days for an order to arrive.
The annual inventory carrying cost of the laptop is of the per unit purchase cost. Your store is open for months out of the year.
Your laptop computer supplier has provided two options for how it could sell you this type of computer:
Option A: if you order fewer than computers when you place an order, each computer costs $
Option B: if you order or more computers when you place an order, each computer costs $
Assume no variability in demand or lead time.
Would it be better for you to pursue Option A or Option B for ordering the basic laptop computers, assuming youd like to minimize your total inventory costs for each year? Additionally, indicate your order quantity and the total inventory cost for your selected option.
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