(Beren's Diaper Problem) Dr. Keskin's son, Beren goes through 12 diapers a day, on average. Dr. Keskin orders his diapers online, getting them for 20 cents per unit at diapers.com. The shipping cost of the order is $8 regardless of the size of the order. Furthermore, it takes a week for order to arrive. As it is desired to run out of diaper inventory, Dr. Keskin estimates the backorder cost of getting the diapers from a local store as 25 cents. Finally, she uses 20% per year as a rate of return to estimate the inventory carrying cost.
a. How many diapers Dr. Keskin should order from diapers.com?
b. When should she order? (Hint: What is the reorder point?)
c. What is the total cost of using disposable diapers?