A company stocks three items having the following characteristics:

Item i Di (Units/Year) vi ($/Unit) Current Qi(Units)

1 1,000 5.00 250 2 4,000 0.80 1,000 3 200 4.00 50

a. Develop an exchange curve of the total average stock (in $) versus the total number of replenishments per year under an EOQ strategy treating A/r as the policy parameter.

b. Plot the current operating position on the graph.

c. For what values of A/r would the EOQ strategy produce an improvement on both aggregate dimensions?