Suppose that the demand for a product is 30 units per month, and items are withdrawn uniformly. The setup cost each time a production run is make is $15. The production cost is $1 per item and the inventory holding cost is $0.30 per item per month.

a) Using this information, determine how often to make a production run and what size it should be.

b) Next, conduct a simple sensitivity analysis. Vary each of the parameters in a) (except for demand) by 5%. Compute the new size of production run and timing for each of the changed parameters individually, and then list them all together (putting this data into a table probably works best). Briefly discuss differences between these values and those you found in a).

c) Next, vary the optimal order quantity Q you found in a) by +/- 10%. Using only integer values for Q over this range of Q, plot each of the relevant inventory costs on the same diagram (digitally or by hand). Be sure to properly label each of the components. Briefly discuss.