Demand = 20,000 per year, constant and uniform throughout the year

Number of working days = 250 (5 days a week, 50 weeks a year)

Order cost = 200.00

Holding cost = 6 per unit per year

Cost per unit = 10

The supplier is willing to make more than one delivery per order, at the rate of 160 per day.

Compute:

1. The optimal order quantity and the associated annual total cost. (4 points)
2. Compute maximum storage capacity (in number of units) needed to accommodate the order quantity in part (a). (2 points)
3. The optimal (best) order quantity if the storage capacity was restricted to 800 units. (4 points)