2. The Alpha Shoe Company purchases leather from Beta Textile Mills. The Alpha Company uses 15,000 yard of the leather per year (365 days) to make shoes. The cost of ordering leather from textile company is P100,000 per order. It cost Alpha P30 per yard annually to hold a yard of leather in inventory. Determine the optimal number of yards of leather the Alpha Company should order, the minimum total annual inventory cost, the optimal number of orders per year and the optimal time between orders.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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2. The Alpha Shoe Company purchases leather
from Beta Textile Mills. The Alpha Company uses
15,000 yard of the leather per year (365 days) to
make shoes. The cost of ordering leather from
textile company is P100,000 per order. It cost
Alpha P30 per yard annually to hold a yard of
leather in inventory. Determine the optimal
number of yards of leather the Alpha Company
should order, the minimum total annual inventory
cost, the optimal number of orders per year and
the optimal time between orders.
Transcribed Image Text:2. The Alpha Shoe Company purchases leather from Beta Textile Mills. The Alpha Company uses 15,000 yard of the leather per year (365 days) to make shoes. The cost of ordering leather from textile company is P100,000 per order. It cost Alpha P30 per yard annually to hold a yard of leather in inventory. Determine the optimal number of yards of leather the Alpha Company should order, the minimum total annual inventory cost, the optimal number of orders per year and the optimal time between orders.
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