How many units should the retailer order each month

Reference no: EM131162668

A retailer wishes to plan the purchase of a certain item for the next five months. Suppose that the demand in these months is known and given by:

Month	Demand
1	10
2	20
3	30
4	30
5	40

The retailer orders at the beginning of each month. Initially he has no units of the item. Any units left at the end of a month will be transferred to the next month, but at a cost of 10 c/ per unit. It costs $20 to place an order. Assume that the retailer can order only in lots of 10, 20, . . . units and that the maximum amount he can order each month is 60 units. Further assume that he receives the order immediately (no lead time) and that the demand occurs just after he receives the order. He attempts to stock whatever remains but cannot stock more than 40 units-units in excess of 40 are discarded at no additional cost and with no salvage value. How many units should the retailer order each month?

Reference no: EM131162668

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