The demand for a purchase item is 1000 units per month, and shortages are allowed. If the unit cost is Rs. 1.50 per unit and the cost of making one purchase is Rs.600/-and the holding cost for one unit is Rs. 2/- per year and the cost of one shortage is Rs. 10/- per year, determine:
(a) Optimum purchase quantity,
(b) The number of orders per year,
(c) The optimum yearly cost. Represent the model graphically.