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Question - The ACE Publishing Company is printing a textbook for a course in production control. They estimate the demand to be 12000 books per year. The inventory carrying costs are estimated at $2/book/year, each order requires a fixed setup cost of $1000, and up to 15000 books may be printed and bound per year. No shortages are allowed, for if the publisher is out of stock, a professor will adopt another text. Leave your answer with 2 decimals and use (.) as decimal separator.
(a) What is the inventory cost for optimal production quantity for ACE?
(b) Suppose that the publisher is in error, and the actual demand is 4608 copies per year. What is the (correct) optimal production quantity for ACE?
(c) How much would ACE be willing to pay to have a perfect estimate of demand?
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