Question

A pharmacist wants to establish an optimal inventory policy for a new antibiotic that requires refrigeration in storage. The pharmacist expects to sell 5400 packages of this antibiotic at a steady rate during the next year. She plans to place several orders of the same size spaced equally throughout the year. The ordering cost for each delivery is $18, and carrying costs, based on the average number of packages in inventory, amount to $6 per year for one package. Use this information to answer the following questions. c) Determine the economic order quantity that minimizes the inventory cost and then find the minimum inventory cost.

          A pharmacist wants to establish an optimal inventory policy for a new antibiotic that requires refrigeration in storage. The pharmacist expects to sell 5400 packages of this antibiotic at a steady rate during the next year. She plans to place several orders of the same size spaced equally throughout the year. The ordering cost for each delivery is $18, and carrying costs, based on the average number of packages in inventory, amount to $6 per year for one package. Use this information to answer the following questions.

c) Determine the economic order quantity that minimizes the inventory cost and then find the minimum inventory cost.

Added by April B.

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