# Determine the expression for Optimum Order Quantity

1)The total relevant cost (TRC) of holding inventory in a production facility is given by:

TRC = (A/Q)(B) + C(Q/2)+D

Where:

Q = order quantity,

A, B, C, D = constants

a)(10 pts) Determine the expression for the optimum order quantity (Q*) based upon the minimum TRC,

b)(5 pts) Prove that the expression in part 'a" is the minimum TRC,

c)(10 pts) If A, B, C, D = 10, 20, 30, 40, respectively, calculate the optimal Q, indicated as (Q*), for minimum TRC,

d)(10 pts) If A, B, C, D = 10, 20, 30, 40, respectively, calculate the minimum cost (TRC*).

Complete the table below with your answers, show work below or on separate sheet

(Please see the attached file).

https://brainmass.com/economics/production/determine-expression-optimum-order-quantity-297100

#### Solution Summary

The expert determines the expression for optimum order quantity. A complete, neat and step-by-step solution is provided in the attached file.