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A company estimates it will sell 5000 products in a year. It would like to make...

A company estimates it will sell 5000 products in a year. It would like to make some number N of qually spaces orders of size x units per order so that the total inventory cost (which includes ordering and storage) is minimized.

a. If there is a $20 per order fixed cost plus a cost of $9 per unit ordered, and the storage cost per unit per year is $10, find the number of orders and the number of units per order that the goal of minimizing inverntory costs is achived.

b. Suppose that the ordering cost doubles to $18 per unit ordered, and that no other change is made. Decide whether this should or should not change the solution that you found in part a. , and justify your answer.

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Expert Solution

comment if you need further clarification!

milcah answered 2 years ago
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