What amount to order would you recommend

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Reference no: EM132118163

A company orders two items. Article 1 costs $ 10 and has an annual demand of 100 units and an order cost of $ 40. Article 2 costs $ 40 and has an annual demand of 180 and order costs of $ 20. The rate for maintaining an inventory is 20% per year. The warehouse space for the two items is limited and, since they are the same size, there can not be more than 40 units in total in inventory at any time. In addition, the total value of the inventory must be within a budget of $ 400 at all times.

What amount to order would you recommend?

Reference no: EM132118163

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