A supply chain manager needs to order raw material for a product. The demand for this raw material translates into, on the basis of the forecast of the demand for the product, to be about 200 units per month. The fixed cost per order is $2000, while the holding cost per unit per month (of the raw material) is about 60 cents.
a. What should be order size?
b. What will be the total cost per month under this order size?
c. If the demand is approximately constant, what should be the level of inventory when the order is placed when the ordering lead time is about 2 weeks?