A pharmacist wants to establish an optimal inventory policy for a new antibiotic that requires refrigeration in storage. The pharmacist expects to sell 6000 packages of this antibiotic at a steady rate during the next year. She plans to place several orders of the same size spaced equally throughout the year. The ordering cost for each delivery is $15, and carrying​ costs, based on the average number of packages in​ inventory, amount to $8 per year for one package. Use this information to answer the following questions. a) Let x be the order quantity and r the number of orders placed during the year. Find the inventory cost​ (ordering cost plus carrying​ cost) in terms of x and r. b) Find the constraint function. c) Determine the economic order quantity that minimizes the inventory cost and then find the minimum inventory cost. X=__________ C=$___________

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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A pharmacist wants to establish an optimal inventory policy for a new antibiotic that requires refrigeration in storage. The pharmacist expects to sell 6000 packages of this antibiotic at a steady rate during the next year. She plans to place several orders of the same size spaced equally throughout the year. The ordering cost for each delivery is $15, and carrying​ costs, based on the average number of packages in​ inventory, amount to $8 per year for one package. Use this information to answer the following questions.

a) Let x be the order quantity and r the number of orders placed during the year. Find the inventory cost​ (ordering cost plus carrying​ cost) in terms of x and r.

b) Find the constraint function.

c) Determine the economic order quantity that minimizes the inventory cost and then find the minimum inventory cost. X=__________ C=$___________

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