Question: Question 2: (10%)

With the reduction in sales driven by the financial crisis that has affected its trade, Office Trade, a wholesaler of office equipment has been conducting a review of its stock ordering system. The management of the company has asked each of the analysts in its finance department, to look at each of its products, and you were asked to look at book shelving units. Having made your research, you have determined that it is uncertain when the recovery will start, so you have established the following demand scenarios for the next 12 months:

Considering the cost per order is £30 and the average carrying cost per unit is £2, make a recommendation to the board of Office Trade, as to how often it should order and what level or stock should be ordered, and assess the impact of this recommendation at the different levels of demand.