A company estimates it will sell 5000 products in a year. I twould like to make some number N of equally spaced orders of size x units per order so that the total inventory cost (which includes prdering and storage) is minimized.   a) If there is a 420 per order fixed cost plus a cost of $9 per unit ordered, and the storage cost per year is $10, find the number of orders and the numbers of units per order so that the goal of minimizing inventory costs is achieved. b) Suppose that the ordering cost doubles to $18 per unit ordered,and that no other chnage is made. Decide whether this should or should not change the solutuon that you foind in part (a), and justify your answer.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
100%

A company estimates it will sell 5000 products in a year. I twould like to make some number N of equally spaced orders of size x units per order so that the total inventory cost (which includes prdering and storage) is minimized.

 

a) If there is a 420 per order fixed cost plus a cost of $9 per unit ordered, and the storage cost per year is $10, find the number of orders and the numbers of units per order so that the goal of minimizing inventory costs is achieved.

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

 

 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 4 images

Blurred answer
Knowledge Booster
Correlation Coefficient
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education