Problem Set 5.

1
Consider an item whose annual demand is 120 units, the holding cost is $8 per item per
annum ($0.67 per item per month), and the ordering cost is $19.2 per order. If the
demand varies by month as shown in the table below, determine the total inventory cost
if you would use the standard Economic Order Quantity (EOQ) policy to manage your
inventory. Assume instantaneous replenishment.
Problem Set 5.2
Consider the situation in problem set 5.1. If you were to use Lot-for-Lot policy, what
would your inventory costs be?