17. A manager of an inventory system believes that inventory models are importantdecision-making aids. The manager has experience with the EOQ policy, but has neverconsidered a backorder model because of the assumption that backorders were "bad"and should be avoided. However, with upper management's continued pressure forcost reduction, you have been asked to analyze the economics of a backorder policyfor some products that can possibly be backordered. For a specific product withD = 800 units per year, C. = $150, C₁ = $3, and C₁ = $20, what is the differencein total annual cost between the EOQ model and the planned shortage or backordermodel? If the manager adds constraints that no more than 25% of the units can bebackordered and that no customer will have to wait more than 15 days for an order,should the backorder inventory policy be adopted? Assume 250 working days peryear.

Answered: Image /qna-images/answer/f761607a-7c98-4103-aa15-f3f66676c78e.jpg

Answered: A manager of an inventory system…

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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