Chapter 2.2, Problem 15E

To determine

a.

i)

To find:

A formula for Q as a function of the fixed ordering cost c, and plot its graph. The fixed ordering costs do not exceed $25.

To determine

ii)

To find:

The number of items to order at a time if the fixed ordering cost is $6 per order.

To determine

iii)

To write:

About increasing fixed ordering cost affect the number of items you order at a time.

To determine

b.

i)

To find:

A formula for Q as a function of the carrying cost h and make its graph. We do not expect the carrying cost for this particular item ever to exceed $25.

To determine

ii)

To find:

The optimal order size if the carrying cost is $15 per unit per year.

To determine

iii)

To write:

About increase in carrying cost affect the optimal order size.

To determine

iv)

To calculate:

The average rate of change per dollar in optimal order size if the carrying cost increases from $15 to $18.

To determine

v)

To explain:

The above graph is concave up or concave down.