What is maximum setup cost can be accepted under policy

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Reference no: EM132166077

Compare the optimum delivery quantities for, (a) a policy in which stock-out is permitted, (b) A policy in which stock out must not occur; demand = 650 per month, cost of holding =$ 5 per annum, setup cost = $1250 cost of stock-out = $2 per item per month. What is the maximum setup cost can be accepted under policy (b) if the total cost per month associated with this policy is not exceeded the total cost per month of policy (a).

Reference no: EM132166077

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