A pharmacist wants to establish an optimal inventory policy for
a new antibiotic that requires refrigeration in storage. The
pharmacist expects to sell 7200 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 $8 per year for
one package.
(a) Let x be the order quantity and r the number of orders
placed during the year. Find the inventory cost (ordering
cost plus carrying cost) in terms of x and r.
C =
(b) Find the Constraint Function
rx =
(c) Determine the economic order quantity that minimizes
the inventory cost and then find the minimum inventory cost.
x =
C = $