The setup cost for placing an order to replenish inventory

Reference no: EM131105027

The demand for a product is 600 units per week, and the items are withdrawn at a constant rate. The setup cost for placing an order to replenish inventory is $25. The unit cost of each item is $3, and the inventory holding cost is $0.05 per item per week.

(a) Assuming shortages are not allowed, determine how often to order and what size the order should be.

(b) If shortages are allowed but cost $2 per item per week, determine how often to order and what size the order should be.

Reference no: EM131105027

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