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Answer:
Suppose that in the inventory problem, the storage cost depends on the maximum inventory size, rather than the average. This would be more realistic if, for example, the company had to build a warehouse large enough to hold the maxi- mum inventory, and the cost of storage was the same no matter how full or empty the warehouse was. Show that in this case the number of units that should be ordered or manufactured to minimize the total cost is q= âfM/k
Step-by-step explanation:
Suppose that in the inventory problem, the storage cost depends on the maximum inventory size, rather than the average. This would be more realistic if, for example, the company had to build a warehouse large enough to hold the maxi- mum inventory, and the cost of storage was the same no matter how full or empty the warehouse was. Show that in this case the number of units that should be ordered or manufactured to minimize the total cost is q= âfM/k
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