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Two alternative inventory plans with different order quantities (Q) Inventory level 200 Plan A 200 Demand (D) = 350 items per year Plan B
Two alternative inventory plans with different order quantities (Q) Inventory level 200 Plan A 200 Demand (D) = 350 items per year Plan B 50 Q50 0.1 yr 0.4 yr Time (c) Total demand (D) is 350 units, the holding cost per unit (Ch) is equal to (0.8) and the ordering cost per order (Co) is (12.5). Calculate the total costs for each plan and state which one is more preferable along with the reason why. [4 marks] There is a stark difference in the composition of the total costs of Plans A and B. Explain this difference and why it occurs. Use the breakdown of costs for each plan to help illustrate your answer. [4 marks]
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