2. An electrical repair shop stores 3 types of small motors. The pertinent and relevant data are shown in the attached table. The cost of capital is estimated at 15% per year. Management has determined that no more than $ 8,000 may be invested in inventory at any time. Additionally, the cellar space is only 750 ft2 for these engines. Determine the optimal inventory policy for these engines under both restrictions.

Motor

1 2 3

Annual demand (units) 1,500 2,000 3,000

Order cost ($ / lot) $ 10 $ 5 $ 7.50

Unit cost ($ / und) $ 50 $ 50 $ 50

Warehouse space per unit 0.50 ft2 1.0 ft2 2.5 ft2

1. Unrestricted solution: Q * = [63.25 | 51.64 | 77.46] Cost: $ 326,443 2. Validate restrictions: Investment in inventory max = $ 9,617> $ 8,000 Not feasible Physical space max = 276.9 ft2 <750 ft2 Feasible Therefore, the problem centers on solving only the infeasible constraint (maximum inventory) 3. Heuristic solution: = 0.8318 Q * = [52.61 | 42.96 | 64.43] Cost: $ 326,467 4. Optimal solution: = 0.03339 Q * = [52.61 | 42.96 | 64.43] Cost: $ 326,467

Please show Procedure