A recognized pharmaceutical company buys and sells a dangerous chemical. This substance is purchased once a month at the beginning of this because its shelf life is one month. If there is any amount of the substance left at the end of the month, the laboratory hires the services of a specialized company to dispose of the product. This company charges $ 1000 for each kilogram of substance handled. The cost of the substance is $ 3,000/ kg and the selling price is $ 12,000/ kg. If there is no substance available when a customer requires it, the laboratory incurs a cost of $ 10,000 / Kg because its policy is to always satisfy the demand. The $10,000 includes the cost of the product and the cost of transportation to supply the product in a very short time. The monthly demand follows a triangular distribution (10,40,60). Calculate the optimal order quantity.
A recognized pharmaceutical company buys and sells a dangerous chemical. This substance is purchased once a month at the beginning of this because its shelf life is one month. If there is any amount of the substance left at the end of the month, the laboratory hires the services of a specialized company to dispose of the product. This company charges $ 1000 for each kilogram of substance handled. The cost of the substance is $ 3,000/ kg and the selling price is $ 12,000/ kg. If there is no substance available when a customer requires it, the laboratory incurs a cost of $ 10,000 / Kg because its policy is to always satisfy the demand. The $10,000 includes the cost of the product and the cost of transportation to supply the product in a very short time. The monthly demand follows a triangular distribution (10,40,60). Calculate the optimal order quantity.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Need help
Transcribed Image Text:A recognized pharmaceutical company buys and
sells a dangerous chemical. This substance is
purchased once a month at the beginning of this
because its shelf life is one month. If there is any
amount of the substance left at the end of the
month, the laboratory hires the services of a
specialized company to dispose of the product.
This company charges $ 1000 for each kilogram of
substance handled. The cost of the substance is $
3,000 / kg and the selling price is $ 12,000 / kg. If
there is no substance available when a customer
requires it, the laboratory incurs a cost of $ 10,000
/ Kg because its policy is to always satisfy the
demand. The $ 10,000 includes the cost of the
product and the cost of transportation to supply
the product in a very short time. The monthly
demand follows a triangular distribution (10,40,60).
Calculate the optimal order quantity.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 18 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education