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The demand for a certain item is 200 units per month. Unsatisfied demand causes a shortage cost of exist100 per unit per month. The cost of initiating manufacturing is exist500.00 and the holding cost is exist1.50 per unit per month. Production cost is exist100.00 per unit and the item may be produced at a rate of 500 units per month. Each item consumes 2.5 cubic meters of warehouse space. The warehouse space reserved for this item is limited to 150 cubic meters. a. Find the minimum-cost procurement quantity and the procurement level under this restriction if the lead time is 1 month. b. What is the cost penalty per month due to the warehouse restriction?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92448188

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