Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 40

Hayes Electronics stocks and sells a particular brand of personal computer. It costs the firm $450 each time it places an order with the manufacturer for the personal computers. The cost of carrying one PC in inventory for a year is $170. The store manager estimates that total annual demand for the computers will be 1,200 units, with a constant demand rate throughout the year. Orders are received within minutes after placement from a local warehouse maintained by the manufacturer. The store policy is never to have stockouts of the PCs. The store is open for business every day of the year except Christmas Day. Determine the following:
a. The optimal order quantity per order
b. The minimum total annual inventory costs
c. The optimal number of orders per year
d. The optimal time between orders (in working days)