Company Z is in the process of reassessing the inventory policy of another product. There is an average demand of 90 products/month, and the company makes an order each month for the same amount. Each product cost $25, and each order cost $60. The holding cost is $4 per product per month.
a) Does Company Z have a sound inventory policy? Explain.
b) Based on "sound policy," if any, that Company Z should have, what should be Company Z inventory policy for this product if the supplier offers the following discounts
- orders between 90-110 (9%)
- orders between 120-140 (12%)
- orders of at least 141 (15%)