Question

Tutorial Exercise A supermarket expects to sell 16,000 boxes of sugar in a year. Each box costs $2, and there is a fixed delivery charge of $20 per order. If it costs $1 to store a box for a year, what is the order size and how many times a year should the orders be placed to minimize inventory costs? Click here to begint

Answer 1

Solution: Given that Annual demand (A) = $16000 boxes Bice of each bon (P) = $2. Delivery cost (0) $20 per order Storage cost (s) - $ 1 per bon per year. The quantity for Min inventory cost is e-vax A x D -> 2x demaud xamdaning court =√ 2 x 16000x20 16000X20 - V 6H0000 1 c = 800 boxes / Hence, for minimum inventory cost, order size is 800 boxes per order. How many times a year should orders be placed is given by A/C => koos 800 20 The No of orders to be placed in a year is 20