The traditional EOQ model considers inventory costs on the consumption side (the saw tooth curve of inventory versus time). Extend this idea to include the inventory costs on the supply side as well.

(II) All other things being the same, what is the relationship between the lead time of supply L (days) and the order quantity Q (units)? Do you expect it to be increasing, decreasing or neither? Linear or non-linear?

(III) When ordering costs are zero, show that it is economical to order in every period (this amounts to s=S)even if it is a small size order. Such a system is called an order-upto system.