A recognized pharmaceutical company buys and sells a dangerous chemical. This substance is purchased once a month at the beginning of this because its shelf life is one month. If there is any amount of the substance left at the end of the month, the laboratory hires the services of a specialized company to dispose of the product. This company charges $ 1000 for each kilogram of substance handled. The cost of the substance is $ 3,000/ kg and the selling price is $ 12,000/ kg. If there is no substance available when a customer requires it, the laboratory incurs a cost of $ 10,000 / Kg because its policy is to always satisfy the demand. The $10,000 includes the cost of the product and the cost of transportation to supply the product in a very short time. The monthly demand follows a triangular distribution (10,40,60). Calculate the optimal order quantity.

A recognized pharmaceutical company buys and sells a dangerous chemical. This substance is purchased once a month at the beginning of this because its shelf life is one month. If there is any amount of the substance left at the end of the month, the laboratory hires the services of a specialized company to dispose of the product. This company charges $ 1000 for each kilogram of substance handled. The cost of the substance is $ 3,000/ kg and the selling price is $ 12,000/ kg. If there is no substance available when a customer requires it, the laboratory incurs a cost of $ 10,000 / Kg because its policy is to always satisfy the demand. The $10,000 includes the cost of the product and the cost of transportation to supply the product in a very short time. The monthly demand follows a triangular distribution (10,40,60). Calculate the optimal order quantity.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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