a. For the following item having zero inventory at the beginning of period 1, develop the magnitude of the first replenishment only using the LUC method.

Item characteristics:

A = $50 v = $2/unit r = 0.05 $/$/period Period j 1 2 3 4 5 6 7 D(j) 200 300 500 500 400 400 300

b. A marked difference between this method and that of Silver–Meal exists in the dependence on D(1). Briefly discuss. In particular, suppose D(1) was much larger than any of the other D(j)’s. What effect would this have on the best T for i. Silver–Meal?

ii. LUC?