Answer to Question #84691 in Microeconomics for Ra

Question

A grocery shop sells milk packets (containing 1/2 a litre of milk) as well. It makes bulk purchase of the same from the nearby city. Every time a purchase is made, it incurs a cost of Rs.50 towards transportation. The daily demand of packets is about 250. Holding cost is Rs.0.10 for a packet a day to preserve it in a refrigerator. Determine the optimum quantity of a bulk purchase and the cycle time.