Solve different inventory control problems using an appropriate OR method.
A drug store sells prescription drugs and health supplements. Vitamins represent a significant of its sales. Demand for vitamins is 10,000 bottles per year. The store incurs a fixed order placement, transportation and receiving cost of £100 each time an order for vitamins is placed with the manufacturer, regardless to order quantity. The store incurs an annual holding cost of 20 percent of purchase price. The price charged by the manufacturer varies according to the following discount pricing.
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Order quantity
|
Unit price
|
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0 - 5,000
|
£3.00
|
|
5,000 - 10,000
|
£2.96
|
|
Over 10,000
|
£2.92
|
Determine the number of vitamin bottles that the store should order in each lot.