What order size will give variable cost

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Reference no: EM132236009

Demand for an item is constant at 1,000 units a year. Unit cost is $50, ordering cost is $100, holding cost is 25 per cent of value a year and no shortages are allowed. (a) Describe an optimal inventory policy for the item (find i) when to order, ii) how much to order, iii) how many orders per year, iv) optimal variable cost, v) optimal total cost.) (b) What order size will give a variable cost within 10 per cent of optimal? (c) What is the cost if suppliers only make deliveries of 200 units? (d) What is the reorder level if lead time is constant at i) 2 weeks, ii) 16 weeks?

Reference no: EM132236009

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