An Assistant Manager Is Reviewing the Costs Associated with the Store's

Question

Examlex · Accepted Answer

The Answer is a.
Qopt

=\sqrt{\frac{2 \mathrm{DS}}{\mathrm{H}}}=\sqrt{\frac{2(500) 40}{7}}=75.59

units
Holding cost

=\frac{Q}{2} H=\frac{75.59}{2} 7=\$ 264.575

Ordering cost

=\frac{\mathrm{D}}{\mathrm{S}} S=\frac{500}{75.59}(40)=\$ 264.575

b.

\begin{array}{l} ext { Qopt }_{ ext { }}=\sqrt{\frac{2 D S}{H}}=\sqrt{\frac{2(1,000) 40}{7}}=106.9 ext { units } \\frac{Q_{}}{2} H+\frac{D}{Q} S=\frac{106.9}{2} 7+\frac{1,000}{106.9} 40=\$ 748.33\end{array}

Definitions: