Question
A trader purchases wheat, corn and barley from local producers and sells them to some food manufacturers. He stores all the commodities in the same
A trader purchases wheat, corn and barley from local producers and sells them to some food manufacturers. He stores all the commodities in the same warehouse which has a limited capacity of 500 square feet of space. A pound of wheat, corn and barley consumes 0.5 ft 2, 0.4 ft2 and 1 ft2 area, respectively. Purchasing costs for the commodities are 0.29, 0.45 and 0.25 liras per pound, respectively. Ordering cost is 5 liras for each commodity. The trader can sell 1000 pounds of wheat, 1500 pounds of corn and 750 pounds of barley per year. Find the optimal order quantities for the commodities. (Annual interest rate is 25%)
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