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    Sample Solution: Linear optimization: Inventory Management

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    Sales per year 10,400 cd's

    Mfg/Purchasing Costs
    She buys from supplier >= 1000 at $4.45 ea CD
    She buys from supplier <=1000 at $4.50 ea CD
    Delivery Charge from her supplier is $10/shipment regardless of size

    She pays Finance Rate annual interest rate 15%
    She pays NYS Property Tax 5% on Annual Inv Value
    She pays Insurance Charges 0.02 for every dollar of inventory

    She Buys from her supplier 200 CD's/Week

    How much does inv management cost her?
    Best small order inventory plan?
    how big are her orders?
    how much does it cost her?
    How much does she save?

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    Solution Preview

    Sales per year 10,400
    Quantity Price per unit
    Less than 1,000 $4.45
    More than 1,000 $4.50

    Delivery charge per shipment $10
    Finance rate 15%
    Property tax 5% of invetory value
    Insurance charges 0.02 for every dollar of inventory
    Order size 200

    Number of orders per year ...

    Solution Summary

    A sample solution to an inventory management problem. Linear optimization and inventory management is examined.