The demand for an item is deterministic and
constant over time and it is equal to 600 units per
year. The per unit of the item is Rs.50 while the
cost of placing an order is Rs.5. The inventory
carrying cost is 20 percent of the cost of inventory
per annum and the cost of shortage is Re.1 per
unit per month. Find the optimal ordering
quantity when stock outs are permitted. If the
stock outs are not permitted, what would be the
loss to the company