Question

2) (20pts) A pharmacy sells three types of syrups. Demand and cost data are summarized as: Syrup-3 65 Syrup-1 110 2.0 2.4 600 Order cost (liras per order) Purchasing cost (liras per bottle) Holding cost (liras per bottle per year) Annual demand (bottles per year) Syrup-2 80 4.0 2.6 900 3.0 2.5 800 What should be the optimal order quantities for each type of syrup if there is a budget limitation of 1400 liras which can be used for inventory-on-hand at any given time. What will be the annual cost for this optimal solution. 3) (20pts) Reconsider the problem in Q.2. Suppose that there is no budget limitation for the inventory, but the storage space can take at most 400 bottles at any time (assuming that all bottles for different syrups are identical). What will be the optimal order quantities in this case.

Answer 1

4Ygwer: optimum order Quantity for each Cynp if there is Budget limitation of iy00 iras. * Asuming the budget Limitaton ciu for each Syrup. optimal order Quantity. 2X Annual Requiremeut X ordening Cost per order Carrying Cost per unit - Per Annum Syrup 2 2X900X80 Synup1 Syrup3 2X65X800 2X600X110 2-5 2.4 2.6 235-33 203.96 234.52.0rder. Quantity for Syrup Bidlget (1.e. 1400) i below 400.livas theretrose they Can erder optimim eadiri Duantity WTNd 1 and Syoup 3 total Coet at above optimum or dering Quantity at synupz: Now, a Puschase Cast X Quantity + ordering Cost xOuantity + Carrying cont per annium per sysup > 1400 > 200 -> So, at Syoup 2 optimum order Ouantit us 200 Syrups. 3) Solution:- The ord optimum ordering Quantity in Syoup 1 is 234.52, in Synip2 is 235.33 and in which is below 400 Bottles at Synup 3 us 203.96 time son the given poblem they lan arder above any given Ouantities for each dyrup when there s no Budget restriction.