Consider a situation where the lowest allowable k value is 0. The B1 shortage-costing method is appropriate.

a. On a plot of k versus Q/σL sketch each of Equations 7.3 and 7.4. (Hint: For each, evaluate dk/d(Q/σL). Also look at the behavior of each for limiting values of k and Q/σL).

b. Attempt to ascertain under precisely what conditions there will be no simultaneous solution of the two equations.

c. Verify, using Equation 7.2, that under such circumstances the cost-minimizing solution is to set k = 0 and Q/σL = EOQ/σL LOP52



1 + 0.5B1/A