Math Problem Statement

Suppose that in the inventory​ problem, the storage cost depends on the maximum inventory​ size, rather than the average. In this​ case, the number of units that should be ordered or manufactured to minimize the total cost is qequalsStartRoot StartFraction fM Over k EndFraction EndRoot . A book publisher wants to know how many times a year a print run should be scheduled. Suppose it costs ​$1200 to set up the printing​ process, and the subsequent cost per book is so low it can be ignored. Suppose further that the annual warehouse cost is ​$4 times the maximum number of books stored. Assuming 5600 copies of the book are needed per​ year, how many books should be printed in each print​ run?

Solution

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Math Problem Analysis

Mathematical Concepts

Inventory Management
Optimization
Algebra

Formulas

q^* = \sqrt{\frac{2 \cdot f \cdot M}{k}} (Economic Order Quantity model with storage costs based on maximum inventory)

Theorems

Economic Order Quantity (EOQ) Model

Suitable Grade Level

College Level / Advanced High School