Reference no: EM132664738

A candy store is looking to identify the optimal order quantity for their product jelly bean. The only costs involved are the cost of ordering 250 and cost of holding 10 $/unit/yr. The following information is provided:

• Once a lot size of Q is received the store sells the jelly bean on sale until half of the lot is gone, at which time the store raises the price of the jelly bean.

This implies that there are two known constant demand rates D1 = 60 boxes/day and D2 = 40 boxes/day, D1 being the rate during the sale. Determine the following:

Question a) Plot the on hand inventory level progress over time, representing the cycle inventory

Question b) What is the fraction of time spent at D1?

Question c) What is the average level of inventory being held as a function of Q?

Question d) Determine the total cost function and compute the optimal ordering quantity Q