Problem
Jennet Electronics supplies circuit chips to a company that incorporates microprocessors into refrigerators and other home appliances. One of the main components has annual demand of 250 units, and this is constant throughout the year. Carrying costs are estimated to be R1 per unit per year, and the ordering cost is R20 per order. Using relevant calculations advise the operations manager on the number of units that should be ordered each time an order is placed to minimize costs and how many orders will be placed in the next 2 years with the optimal policy. In addition, what is the average inventory if costs are minimized?