A shop manager orders packs of drinks as soon as the shop runs out. Assume that orders are delivered instantaneously. Demand is constant, D = 100 packs per time unit. Storing the drinks in inventory incurs opportunity costs at a rate of 5% per , time unit, and packs. Now, the manager has a choice between two suppliers, S1 and S2. With S1, the shop pays a fixed cost 100 every time it makes an order and each packs value is 20. With S2, the shop pays a fixed cost of 200 every time it makes an order and each packs value is 5. Assuming that, for each supplier, the manager would order the amount of packs that minimise cost per time (while always meeting demand), which supplier would minimize total cost?

Do all of the calculations that you feel are relevant and write a short report, including your calculations, which can be photographs of handwritten equations. The report should also include a discussion of the appropriateness the assumptions of the model.