There are 250 working days per year and the lead-time is 6, Ask an Expert

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Everett Mann's Dream Store sells waterbeds and supplies. The best selling bed in the store has an annual demand of 400 units. The ordering cost is $40, while the holding cost is $5 per unit per year. There are 250 working days per year, and the lead-time is 6 days.

(a) To minimize total cost, how many units should be ordered each time an order is placed?
(b) If the holding cost per unit was $6 instead of $5, what would the optimal order quantity be?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M976368

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