Find the optimal purchasing policy for the hospital

Reference no: EM132707862

Question - Kenyatta university health unit buys a certain antibiotic from a large supplier. The drug can be bought at the following prices:

Quantity Price per unit (Sh.)

1 - 4,999 - 2.75

5,000 - 9,999 - 2.60

Over 10,000 units - 2.50

The demand for the drug in the health unit is 50,000 units a year. There is an ordering cost of Sh. 50 per order and a holding cost of 20% of the cost of the item per unit per year. Find the optimal purchasing policy for the hospital?

Reference no: EM132707862

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