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Plot the total holding costs and the total ordering costs

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Question - A firm that sells 5,000 blivets per month is trying to determine how many blivets to keep in inventory.  The financial manager has determined that it costs $200 to place an order.  The cost of holding inventory is 4 cents per month per average blivet in inventory.  A five-day lead time is required for delivery of goods ordered.  (This lead time is known with certainty.)

1- Develop the algebraic expression for determining the total cost of holding and ordering inventory.

2- Plot the total holding costs and the total ordering costs on a graph where the horizontal axis represents size of order and the vertical axis represents costs.

3- Determine the EOQ from the graph.

Reference no: EM133148448

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