Discuss the below:
Q: Leaky Pipe, a local retailer of plumbing supplies, faces demand for one of its SKUs at a constant rate of 30,000 units per year. It costs Leaky Pipe $10 to process an order to replenish stock and $1 per unit per year to carry the item in stock. Stock is received 4 working days after an order is placed. No backordering is allowed.
Assume 300 working days a year.
What is Leaky Pipe's optimal order quantity?
What is the optimal number of orders per year?
What is the optimal interval (in working days) between orders?