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A company wishes to determine the optimal order quantity for its products. The product is sold at a rate of 800 per week. Each order
A company wishes to determine the optimal order quantity for its products. The product is sold at a rate of 800 per week. Each order costs $500. On average, the cost of each product is $8 and the holding cost is based on an annual percentage rate of 10% per product. The lead time for order arrival is 1.5 weeks. Respond to parts (a) Suppose that annual percentage rate may vary up to 14% per product. How much will the optimal order quantity and the total cost vary? Perform the robustness analysis. (b) Suppose the ordering cost may vary up to $650 instead of $500. Compare the $650 and $500 ordering cost by performing robustness analysis. (c) Perform robustness analysis when the demand is 1100 per week instead of 800 per week
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