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A company is concerned with the stock of three items with the characteristics shown in the following Table. The items have a reorder cost of

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A company is concerned with the stock of three items with the characteristics shown in the following Table. The items have a reorder cost of $100 and a holding cost of 20% of the unit cost a year. What would be the best ordering policy if the company wants to limit average investment in these items to $40002 Item R Demand 100 300 200 Unit cost 100 60 40 HC 20 (= 0.2*100) 12 = 0.2*60) 8 (= 0.2*40) C 100 100 100

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