Purchase Solution

Determine the expression for Optimum Order Quantity

Not what you're looking for?

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

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.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.