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The demand for a product is 200 units per week, and the items are withdrawn at a constant rate. The setup cost for placing an order to replenish inventory is RM80. The unit cost of each item is RM30, and the inventory holding cost is RM26 per item per year. (i). Assuming shortages are not allowed, calculate the size of the order and the time the order should be made. (ii). If shortages are allowed but cost RM2 per item per day, identify how often to order and what size the order should be.

The demand for a product is 200 units per week, and the items are withdrawn at a constant rate. The setup cost for placing an order to replenish inventory is RM80. The unit cost of each item is RM30, and the inventory holding cost is RM26 per item per year. (i). Assuming shortages are not allowed, calculate the size of the order and the time the order should be made. (ii). If shortages are allowed but cost RM2 per item per day, identify how often to order and what size the order should be.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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5. The demand for a product is 200 units per week, and the items are withdrawn at a constant rate. The setup cost for placing an order to replenish inventory is RM80. The unit cost of each item is RM30, and the inventory holding cost is RM26 per item per year. (i). Assuming shortages are not allowed, calculate the size of the order and the time the order should be made. (ii). If shortages are allowed but cost RM2 per item per day, identify how often to order and what size the order should be.
Transcribed Image Text:5. The demand for a product is 200 units per week, and the items are withdrawn at a constant rate. The setup cost for placing an order to replenish inventory is RM80. The unit cost of each item is RM30, and the inventory holding cost is RM26 per item per year. (i). Assuming shortages are not allowed, calculate the size of the order and the time the order should be made. (ii). If shortages are allowed but cost RM2 per item per day, identify how often to order and what size the order should be.
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