Consider a family of four items with the following characteristics:

A = $100 r = 0.2/year Divi ai Item i ($/Year) ($)

1 100,000 5 2 20,000 5 3 1,000 21.5 4 300 5

a. Use the procedure of Section 10.2.2 to find appropriate values of the family cycle time T and the integer mi’s.

b. Suppose that we restricted attention to the case where every item is included in each replenishment of the family. What does this say about the mi’s? Now find the best value of T.

c. Using Equation 10A.2 (in this Appendix), find the cost difference in the answers to parts a and

b. P-96