Black Company Decided Holding Cost Inventory Item 25 Per Cent Value Year Shortage Cost Bac Q32398178

Black Company decided that the holding cost of an inventory itemis about 25 per cent of value a year while the shortage cost forback-orders is 150 per cent of value a year. Unit cost is $400 andreorder cost is $100. Demand is constant at 300 units per year andall shortages are met by backorders. (a) What is the best orderingpolicy for this item? (Determine (i) optimal order size, ii)optimal shortage size, iii) cycle length, iv) number of orders peryear) (b) What proportion of time is demand met by back-orders? (c)What is the cost of this policy