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DaniilM [7]
3 years ago
6

Matthew​ Liotine's Dream Store sells water beds and assorted supplies. His​ best-selling bed has an annual demand of 410 units.

Ordering cost is ​$41​; holding cost is ​$5 per unit per year.
To minimize the total cost, how many units should be ordered each time an order is placed?
Business
1 answer:
never [62]3 years ago
5 0

<u>Given:</u>

Annual demand = 410 units

Ordering cost = $41

Holding cost = $5 unit per year

<u>To find:</u>

Number of units to be ordered each time an order is placed

<u>Solution:</u>

On calculating the number of units,

\Rightarrow \sqrt{(\frac{2(390)(38)}{5})} \rightarrow\sqrt{\frac{780\times38}{5}}= 76.99

Therefore, to minimize the total cost, approximately 77 units should be ordered each time an order is placed.

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