EOQ Model: The company management has indicated a desire to adopt a very simple inventory control

policy for the three engine oil products. In particular, they have heard that the economic order quantity

model is easy to understand due to the constant and known demand assumption. Determine the EOQ and

reorder level for each of the three engine oil products and calculate the inventory costs $($fixed order, and

holding costs$)$ under this constant demand scenario.

$2.($Q$,$R$)$ Model: A new member of the management team, Alex Hamm, has an MBA and is eager to see how

much of an impact modeling uncertainty may have on the inventory control policy used. In particular, he

would like to see the stockout costs factored into the calculation of the inventory control policy since he

feels that the estimated stockout costs are not negligible, especially in comparison to the estimated holding

costs. Now determine the optimal order quantity and reorder level using a $($Q$,$R$)$ policy designed to consider

the stochasticity of demand explicitly. First check that all of the $($Q$,$R$)$ policy assumptions are met in this

case.