Inventory Modeling

A company needs about 250,000 carton of butter per month. Each butter order costs $17. It costs $1 in storage. The order is supplied at the same day of the order. One butter takes 0.05m2 of space. In addition, the company needs 1,500 bags of flour per month. Each flour order costs $30. Each flour bag costs $1 in storage. The order is supplied at the same day of the order. One flour bag takes 2.5m2 of space. The company has a 5000m2 storage space.

1)The order quantity Y1(butter) *

2619 butter carton

$2916

2916 butter carton

$2619

2) The order quantity Y2(flour) = *

300 flour bags

$300

$303

303 flour bags

3) After applying the constraint ( ) we deduce that _______________ and _____________. *

the constraint is satisfied; Y(butter) & Y(flour bags) are not optimal.

the constraint is satisfied; Y(butter) & Y(flour bags) are optimal.

the constraint is violated & binding; must be accounted for

the constraint is violated; Y(butter) & Y(flour bags) are optimal.

4) TCU (Y(butter)) = *

K1/(D1/y1) + h1Y1/2 = $2915.47/month

K1/(y1/D1) + h1Y1/2 = $2915.47/year

K1/(y1/D1) + h1Y1/2 = $2915.47/month

K1/(D1/y1) + 2h1/Y1 = $2915.47/month

5) TCU (Y(flour)) = *

K2/(y2/D2) + h2Y2/2 = $300/month

K2/(D2/y2) + h2Y2/2 = $300/month

K2/(y2/D2) + h2Y2/2 = $300/year

K2/(D2/y2) + 2h2/Y2 = $300/month