An Introduction to Management Science 13th Edition by David Anderson,Dennis Sweeney ,Thomas Williams ,Jeffrey Camm, Kipp Martin

Exercise 4

Suppose that Westside Auto of Problem 4, with D = 12,000 units per year. C h = (2.50)(0.20) = $0.50, and C o = $25, decided to operate with a backorder inventory policy. Backorder costs are estimated to be $5 per unit per year. Identify the following:
a. Minimum cost order quantity
b. Maximum number of backorders
c. Maximum inventory
d. Cycle time
e. Total annual cost