For inventory problems, the cost is a function of the order size. A company has collected the
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For inventory problems, the cost is a function of the order size. A company has collected the following data for one of its product.
Annual requirement, R = 12,000 Ordering cost per order, S = 150 Cost per unit, C = 4 Carrying cost per unit, I = 0.20 Quantity ordered per order, Q = 100 Develop a general model for computing ordering cost, carrying cost, and total cost functions. Use the following formulas:
Ordering cost = (R/Q)*S Carrying Cost = (Q/2)*I*C Total Cost = Ordering cost + Carrying Cost
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