Question

You must make a decision about purchasing an article in your supplier. Demand in your firm for this supply changes in periods (months), but is known (Table 3). There are the following cost elements: ordering cost is c_o = 114,- zł, unit price in purchasing is P = 15,- zł, period inventory holding cost rate is r = 8% of price. According to the order the supply increases inventory nearly immediately (without a delay at the beginning of the period) and it should allow fulfilling a demand of this period. Initial inventory is 0. Determine plan of period orders in your supplier. First calculate a “critical” (break-even) point Q* for ordering.   

Q* = ...

Table 3. Demand, inventory levels, orders and total cost

	Period no.	Demand	Initial Inventory	Orders	Final Inventory	Period Total Cost
	1	75	0
	2	45
	3	25
	4	60
	5	120			0
	Total cost

Calculations: …