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2 . A consulting firm is trying to determine how to minimize the costs associated with purchasing paper. Paper is consumed at the rate of
A consulting firm is trying to determine how to minimize the costs associated with purchasing paper. Paper is consumed at the rate of reams per day. Each time an order is placed an ordering cost RM is incurred and the holding cost per ream per day is of the unit purchase cost. Suppose no shortage is allowed and that the purchasing cost per ream is RM for any quantity not exceeding reams and RM otherwise. Determine the optimal inventory policy, given a days lead time.
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