Company X stocks a certain type of containers, each of which occupies 4 square feet of warehouse
space. The warehouse space currently available for storing this type of container is limited
to 3000 square feet. Demand for the container is 12,000 units per year. The ﬁxed ordering
cost is $30 per order and the holding cost per unit is $2 per year.
(a) What is the optimal order size that minimizes the total ordering cost and holding cost? Canwe accommodate the calculated optimal order quantity in our warehouse?
(b) Now suppose that some storage space has to be used for other purposes,leaving only 2000
square feet available for storing this type of container. The holding cost per unit remains
$2 per year. What is the optimal order size in this case? Explain why (no more than two