INVENTORY MODELS

This is the use of mathematical models to determine the best inventory level to maintain and the

best time to re-order merchandise.

An inventory is any stock of economic resources that is stored for future use. Examples are food

in a store, cash in the bank, blood in the blood banks e.t.c

Some types of inventories maintained by organizations for their production systems include raw

materials, semi-finished products, and finished products.

Purpose of inventory

1. Protection against fluctuating demand

i.e. inventories are kept to meet peak demand.

2. Protection against delayed supply.

Sometimes deliveries may not arrive in time due to unforeseen eventualities.

In such a case inventories are kept as a buffer that can be used until late deliveries arrive.

3. Protection against fluctuation.

Inventories are always kept as a hedge against fluctuating prices.

Inventories are a build up in anticipation of price increase

4. Economies of scale Which attract

discounts
Purchasing large quantities of an item entitles the buyer to price and quantity discount.

Page 1 of 20
 5. Saving and ordering costs

Ordering in large quantities reduces the number of times that an order must be placed and

processed. Since a fixed cost is associated with placing each order, the fewer times that

one places an order the lower the total ordering costs.

6. Bargaining power

Inventories improve the bargaining power of a firm with a supplier by making the firm

less vulnerable to delays and stoppages.

TERMINOLOGY

P. M is
1. Retail model versus production model
ordering
Retail model are those in which the replenishment inventories are purchased from

suppliers outside the firm. The model assumes that inventories are replenished

instantaneously upon receipts of the order.

Production model are those in which the replenishment inventories are produced

internally by the firm. The model assumes that the replenishment occurs over time.\

2. Demand versus depletion of inventory. Demand is the use depletion is the rate
of use
Demand refers to the use of stock while depletion is the rate of use of stock.

The rate of use of the stock determines the depletion rate. The demand on the stock may

be known with certainty and such model is referred to as deterministic demand model.

The rate of demand could be constant or fluctuating. A constant rate of demand for

example could be five units per time period which reduces the inventory and equal steps

approximated by a straight line while fluctuating demand approximated by a curve.

Page 2 of 20
 Inventory level

Constant Demand

Time

Inventory level

Fluctuating
Demand

Time
3. Lead time versus re-order points

A re-order point is a certain predetermined level of inventory at which a replenishment

order is initiated.

Lead time is the time between the initiation of the replenishment activity and the receipts

or delivery of the replenishment inventories.

Page 3 of 20
 N/B as in the demand, lead time can be constant and known with certainty or can be

probabilistic in nature.

4. Ordering policy

Two basic decisions must be resolved in any inventory system.

 What quantity should be ordered or produced.

 When to order or produce i.e. at what point do we make an order/produce.

a) The order- point system Monitor stock and then order what you always
order to fill you order. Predetermined order
This is often referred to as the perpetual inventory system where a perpetual inventory
point no matter the time
record is maintained and reviewed on a continual basis. When the inventory reaches a

predetermined level (re-order point) a replenishment order/activity for a fixed quantity of

items is initiated.

The system is used when the number of items demanded per transaction is relatively

larger and where inventory cost is significant.

b) Periodic review system.

Inventories are not reviewed continually but rather checks are made at predetermined

fixed intervals of time. The replenishment inventories ordered vary from time to time i.e.

the inventory at hand is compared with the desired inventory level and the difference

between the two levels is the quantity ordered.

5. Shortages / stock outs

Inventory shortages occur when demand exceeds the quantity of inventory at hand.

Shortages may either be accidental or planned; regardless of the cause a policy must be

developed that addresses the problem of shortages. A model that takes into considerations

shortages by fulfilling them at a later date employs a back-ordering policy.

Addresses
shortages
Page 4 of 20
 In this case demand is accumulated and fulfilled when replenishment inventories are

received. On the other hand models in which shortages are not back-ordered are referred

to as lost-sales policy models.

6. System structure

Inventory systems are either single stage or multiple stage systems.

Single stage systems is one in which the inventories are used to directly satisfy demand

e.g. inventories that a retailer holds to meet consumer demand, medical supplies that a

hospital would maintain to meet daily medical demands.

Multiple stage systems are those in which multiple inventory stock points exist e.g. the

manufacturer- retailer- consumer system together is a multiple stage system.

COST CRITERIA

The major problem of inventory management is determining the appropriate inventory level.

This problem is related to the problem of how much to order and when to order. If a commodity

is ordered frequently then the costs of ordering are high. On the other hand ordering more units

less frequently saves on ordering cost but increases the expenses of keeping a large inventory.

Therefore a proper ordering policy is a dilemma.

The most common criteria used in inventory analysis or management are the inventory related

costs criteria whose aim is to minimize the total costs of inventory. This includes;

1. The ordering costs

These costs are incurred whenever an inventory replenishment activity incurs. It includes all the

expenses of placing orders such as decrial and administrative costs, processing and expediting

costs, recovering and inspection costs, accounting and auditing costs e.t.c

Page 5 of 20
It is assumed that the ordering costs are constant and independent of the order size.

In a production model ordering coats are referred to as set-up costs while an order size is

referred to as a production run.

2. Carrying cost / storage cost/ holding costs Direct cost associated with storing cost
Seen as an opportunity cost like holding money =amount of
cost
Implicit cost is indirect costs
These are the costs associated with holding a given level of inventory over specific time period.

They consist of explicit and implicit costs associated with maintaining and owning inventory.

This include the opportunity cost of money invested, the cost of physical storage (rent, heating,

lighting and refrigeration, record keeping, security e.t.c)

It also includes depreciation; insurance e.t.c. carrying costs are expressed as a cost per unit of

time. It is assumed to be proportional to the average number of units in the inventory,.

3. Shortage/ stock outs costs

This is the cost that occurs when an item cannot be supplied upon demand. The size of the

cost depends on whether back ordering is permitted. If not, then an inventory shortage will

result in the permanent loss of sales for items demanded but not available. An additional

good will cost will be incurred if the clients take future business elsewhere. If back ordering

is permitted the relevant shortage costs are the clerical and administrative costs associated

with back ordering.

Generally shortage costs are assumed to be fixed per shortage regardless of the size shortage

or the period of time over which the shortage occurs.

Page 6 of 20
 4. Purchase/ production costs

This is the direct cost associated with the actual purchase production of an item. In this case the

cost per unit is assumed to be constant regardless of the quantity purchase or produced.

However, these assumptions will be relaxed if quality or price discounts are allowed depending

on the order sizes.

ECONOMIC ORDER QUANTITY MODEL

It is the simplest inventory model that relates to the retail function.

Assumption

1. Demand is known with certainty and is constant over time

2. The lead time is zero i.e. an order is received at the time/instant it is placed.

3. An order point system is employed i.e. inventories are reviewed continuously

4. The inventory is replenished when the inventory is exactly zero.

5. The inventory replenishment is instantaneous i.e. the entire order is received in a single

batch.

6. The order quality is constant for each other replenishment order.

7. The problem involves a single stage system

Inventory

Retail model

Ro
T1 T2 Page 7 of 20 Time
 Total cost =ordering cost + holding
cost

N/B

The downward sloping line indicates that the inventory is being used at a constant rate over

time.

Since the lead time is zero and the replenishment is instantaneous then the re-order point R is

determined automatically when the inventory reaches zero. The quantity ordered at each

replenishment point is Q.

The objective is to determine the optimal order quantity Qx so that the total inventory costs

are minimized.

As the order quantity rises, fewer orders are necessary and hence the ordering costs will

decrease i.e the bigger the quantity Q, the less are the ordering costs.

On the other hand as the order size increases more units are held in inventory and hence the

carrying costs increase.

Since the ordering costs and carrying costs respond in opposite manner as the order size

increases, the optimal order quantity is the point where the ordering costs are equal to the

carrying costs.

Cost
s

Total Costs
Carrying costs

Ordering costs

Qx Q

Page 8 of 20
 Let 𝐶𝑜 be the ordering cost per order.

𝐶𝑐 – Carrying cost per unit per time period.

𝑇𝑐 - Total inventory cost/time period.

𝑄 - Order size/ quantity ordered

𝐷 - Demand per time period.

The decision variable for which a solution is sought is the order size (Q)

We seek to minimize TC.

𝑀𝑖𝑛 𝑇𝐶 = 𝑡𝑜𝑡𝑎𝑙 𝑜𝑟𝑑𝑒𝑟𝑖𝑛𝑔 𝑐𝑜𝑠𝑡𝑠 + 𝑡𝑜𝑡𝑎𝑙 𝑐𝑎𝑟𝑟𝑦𝑖𝑛𝑔 𝑐𝑜𝑠𝑡𝑠.

𝑇. 𝑂. 𝐶 = 𝑐𝑜𝑠𝑡 𝑝𝑒𝑟 𝑜𝑟𝑑𝑒𝑟 𝑋 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠.

𝑫
Since the demand D/time period is known, the number of orders is given by 𝑸

𝐷
𝑇ℎ𝑒𝑟𝑒𝑓𝑜𝑟𝑒; 𝑇𝑂𝐶 = 𝐶𝑜 𝑋
𝑄

Total carrying costs T.C.C

𝑇. 𝐶. 𝐶 =

𝑐𝑎𝑟𝑟𝑦𝑖𝑛𝑔 𝑐𝑜𝑠𝑡𝑠 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 𝑝𝑒𝑟 𝑡𝑖𝑚𝑒 𝑝𝑒𝑟𝑖𝑜𝑑 × 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑜. 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠 ℎ𝑒𝑙𝑑 𝑖𝑛 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦.

1
𝑋𝑇1 𝑋𝑄
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 = 2
𝑇1

𝑄
=
2

𝑄
𝑇𝐶𝐶 = 𝐶𝑐 𝑋
2
Page 9 of 20
 𝐷 𝑄
𝑀𝑖𝑛 𝑇𝐶 = 𝐶𝑜 𝑋 + 𝐶𝑐 𝑋
𝑄 2

𝜕𝑇𝐶 𝐷 𝐶𝑐
= −𝐶𝑜 2 + = 0
𝜕𝑄 𝑄 2

𝐷 𝐶𝑐
𝐶𝑜 𝑋 =
𝑄2 2

𝑄 2 𝐶𝑐 = 2𝐶𝑜 𝐷

2𝐶𝑜 𝐷
𝑄2 =
𝐶𝑐

2𝐶𝑜 𝐷
𝐸𝑂𝑄 = 𝑄 ∗ = √
𝐶𝑐

Once EOQ is determined we can compute;

1. The optimal number of orders /time period.

𝐷 𝐷
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 = =
𝑄∗ 2𝐶𝑜
√
𝐶𝑐

𝐷𝐶𝑐
=√
2𝐶𝑜

2. The inventory cycle – time between the orders i.e. 𝑇

𝑇– 𝐼𝑛𝑣𝑒𝑟𝑠𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑜𝑝𝑡𝑖𝑚𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠

1
𝑇=
𝑁∗

Page 10 of 20
 𝑻 = √𝟐𝑪𝒐 𝑪𝒄 𝑫

Example;

𝑆𝑢𝑝𝑝𝑜𝑠𝑒 𝐶𝑜 = $ 20.

𝐶 𝑐 = $ 100 / 𝑢𝑛𝑖𝑡 / 𝑦𝑒𝑎𝑟

𝑇𝑖𝑚𝑒 𝑝𝑒𝑟𝑖𝑜𝑑 𝑚𝑢𝑠𝑡 𝑏𝑒 𝑡ℎ𝑒 𝑠𝑎𝑚𝑒.

𝐷 = 365 𝑢𝑛𝑖𝑡𝑠 / 𝑦𝑒𝑎𝑟

Determine Economic order quantity

2𝑋20𝑋365
1. 𝑄 ∗ = √ 100

= 12.083

≃ 12
365
2. 𝑁 ∗ = ≃ 30
12

1 1
3. 𝑇𝑐 = = = 0.03 𝑦𝑒𝑎𝑟𝑠
𝑁∗ 30

𝐷 100𝑋12 7300
𝑇𝑐 = 𝐶𝑜 𝑋 + = + 600
𝑄 2 12

Ordering costs and carrying costs should be exactly the same

𝑇𝑐 ≃ 1200

Alternatively ;

𝑇𝑐 = √2𝐶𝑜 𝐶𝑐 𝐷 = √2𝑋100𝑋365𝑋20

𝑇𝑐 ≃ 1208

Page 11 of 20
EOQ MODEL WITH QUANTITY DISCOUNTS

So far we have been silent about the unit purchasing price. It has been assumed constant. In

practice however, it’s common for suppliers to allow purchase price discount if the

replenishment orders are sufficiently large.

The discount may be at two levels

1. A discount offered at one price level.

2. A discount at several price levels/breaks.

1. Discount at a single price level

The approach for evaluating the impact of a single price discount is to compare the TC for

the optimal inventory policy without discounts with the TC if the discount is accepted.

The TC equation for evaluating the discounts must include the purchasing costs per time

period

𝐷 𝑄∗
𝐿𝑒𝑡 𝑇𝑐 𝑄 ∗ = 𝐶𝑜 + 𝐶𝑐 + 𝐷. 𝑃(𝑁𝑜 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡)
𝑄∗ 2

𝐷 𝑄
𝑇𝑐 (𝑄 ∗ ) = 𝐶𝑜 + 𝐶𝑐 + 𝐷. 𝑃(𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡)
𝑄 2

If 𝑇𝑐 𝑄 < 𝑇𝑐 𝑄 ∗ then we accept the discount otherwise we reject the discount. In other words

we go by the optimal order policy.

Consider the previous example, suppose a discount of 2% is offered at the normal purchase

price of $ 500 /unit for a purchase of 20 units or more.

𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑖𝑠 2%

𝑃 = $ 500

𝑄 = 20
Page 12 of 20
 365 12
𝑇𝑐 𝑄 ∗ = 20. + 100. + (365𝑋500)
12 2

608 + 600 + 182500 = 183708

365 20
𝑇𝑐 𝑄 = 20. + 100. + 365(0.98𝑥500)
20 2

365 + 1,000 + 178,850 = 180,215

𝑇𝑐 𝑄 < 𝑇𝑐 𝑄 ∗ 𝑡ℎ𝑒𝑟𝑒𝑓𝑜𝑟𝑒 𝑤𝑒 𝑎𝑐𝑐𝑒𝑝𝑡 𝑡ℎ𝑒 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡.

Comparing the individual costs components for the two models, the ordering costs decreases

for a large order size while the carrying cost increases.

The reduction in the O.C will not offset the increase in the C.C but the 2% discount in

purchase price more than offsets the increased costs and the result is a saving of $ 3493.

2. Model with price breaks

Consider a hospital that buys a certain antibiotic from a large supplier. The drug can be

bought at the following prices;

Quantity Price per unit ($)

1-4999 2.75

5000-9999 2.6

10000 & above 2.5

The demand for the drug in the hospital is 50,000 units per year. There is an order cost of $50

per order and a holding cost of 20% of the cost of the item per unit per year. Determine the

optimal purchasing policy for the hospital.

𝐷 = 50000/𝑦𝑒𝑎𝑟

𝐶𝑜 = $50/𝑜𝑟𝑑𝑒𝑟

𝐶𝑐 = 0.2/𝑢𝑛𝑖𝑡/𝑦𝑒𝑎𝑟

Page 13 of 20
 Steps

1. Find 𝐸𝑂𝑄 ∗ : Q1*for the lowest price level:

2 ∗ 50 ∗ 50000
𝑄1 = √ = 3163 𝑢𝑛𝑖𝑡𝑠.
0.5

2. Compare Q1* to the quantity required for the price break i.e. 10,000 and above; if Q* is

larger than this quantity the problem is solved; if less, the solution isn’t feasible and the

search continues.

In the above case 3163 is not feasible because it is less than 10000

3. Select the next higher item cost i.e. $2.6 and calculate the EOQ: Q2*

2 ∗ 50 ∗ 50000
𝑄2 = √ = 3100.86 𝑢𝑛𝑖𝑡𝑠
0.2𝑥2.6

4. Repeat step number 2 i.e. compare Q2 * to the range that is required for the equivalent

price; since Q2* is not within this range the solution is not feasible and the search

continues.

5. Compute EOQ for the next higher price i.e. Q*3

2 ∗ 50 ∗ 50000
𝑄3 = √ = 3015 𝑢𝑛𝑖𝑡𝑠
0.2𝑥2.75

Since Q3* is within the appropriate range of the price it’s a feasible solution.

6. Execute a cost comparison i.e. the total annual cost is computed for the feasible EOQ.

This cost is compared with the total annual cost for each of the minimum quantities for

each price breaks.

Page 14 of 20
 50000 3015
𝑇𝑐 (3015) = 50. + 0.55𝑥 + 50000𝑥2.75
3015 2

= 139158

50000 5000
𝑇𝑐 (5000) = 50. + 0.52𝑥 + 50000𝑥2.60
5000 2

= 131800

50000 10000
𝑇𝑐 (10000) = 50. + 0.5𝑥 + 50000𝑥2.50
10000 2

= 127750

Conclusion

The hospital should make orders of 10,000 and above because this minimizes the total inventory

costs.

Page 15 of 20
PRODUCTION LOT-SIZE MODEL

The retail model assumes that the entire replenishment order is received instantaneously.

However for the production model, the replenishment results from a production run which may

take a significant time to complete i.e. the production line output goes into the finished stock

inventory and the goods demanded are supplied from the inventory.

The basic production lot-size model assumes a zero re-order point and will not allow stock-outs.

Inventory Level Q

M Max Inventory

Average Inventory

O
T1 T2 Time

The total inventory cost is made up of set- up cost and holding costs.

Let Co represent the set up cost or production lot size run i.e. the set up cost component is

identical to the ordering cost component of the EOQ model where

𝐷
𝑆𝑒𝑡 𝑢𝑝 𝑐𝑜𝑠𝑡𝑠 = 𝐶𝑜
𝑄

Page 16 of 20
If we let 𝐶𝑐 be the holding costs per unit per time period then the holding cost component of this

model can be defined similarly to the carrying cost component of the EOQ model

ℎ𝑜𝑙𝑑𝑖𝑛𝑔 𝑐𝑜𝑠𝑡𝑠 = 𝐶𝑐 × 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦.

The average inventory for this model differs slightly from the EOQ model. It is computed by

dividing the area by the length of time.

1 1
𝑡 𝑚+ 𝑡2 𝑚
2 1
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 = 2
……………………………..*
𝑡1 +𝑡2

𝑚 is the maximum inventory level. To compute it we must define the production or

replenishment rates and the demand /usage rates.

Let 𝑟1 be the number of units per time period resulting from the production process i.e. the rate at

which goods are produced and placed in inventory.

Let 𝑟2 represent the number of units per time period demanded (equivalent is the D in the EOQ

model)

In a feasible model the production rate 𝑟1 must be greater than the demand rate 𝑟2 (𝑟1 > 𝑟2 );

otherwise production will not be able to keep up with the demand. Therefore immediately after

an order is placed in production, the inventory levels rises at a constant rate of (𝑟1 − 𝑟2 ) until the

end of the period 𝑡1 at which time the inventory is equal to 𝑚.

During the period 𝑡2 the inventory falls to a constant demand rate 𝑟2 .

𝑄
Since 𝑟1 is the production rate then 𝑡1 = 𝑟 which is the time period taken to produce the entire
1

order.

Page 17 of 20
The number of units demanded during the period 𝑡1 is given by

𝑟2 𝑡1

𝑄
𝐵𝑢𝑡, 𝑡1 =
𝑟1

𝑄
𝑇ℎ𝑒𝑟𝑒𝑓𝑜𝑟𝑒 𝑑𝑒𝑚𝑎𝑛𝑑 = . 𝑟2
𝑟1

𝑄
𝑎𝑛𝑑 𝑚 = 𝑄 – 𝑟
𝑟1 2

𝑟2
𝑀 = 𝑄 (1 − )
𝑟1

Substituting 𝑚 in average equation (*) above and solving the average inventory =

1 𝑟 1 𝑟
𝑡1 {𝑄 (1 − 2 )} + 𝑡2 {𝑄 (1 − 2 )}
2 𝑟1 2 𝑟1
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 =
𝑡1 + 𝑡2

𝑄 𝑟2
𝐴. 𝐼 = (1 − )
2 𝑟1

𝑄 𝑟2
𝐻𝑜𝑙𝑑𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 = 𝐶𝑐 𝑥 (1 − )
2 𝑟1

𝐵𝑢𝑡 𝑇𝑐 = 𝑠𝑒𝑡𝑢𝑝 𝑐𝑜𝑠𝑡 + ℎ𝑜𝑙𝑑𝑖𝑛𝑔 𝑐𝑜𝑠𝑡

𝐷 𝑄 𝑟2
𝑀𝑖𝑛 𝑇𝑐 = 𝐶𝑜 . + 𝐶𝑐 . (1 − )
𝑄 2 𝑟1

Page 18 of 20
 𝜕𝑇𝑐 𝐷 1 𝑟2
= −𝐶𝑜 2 + 𝐶𝑐 . {1 − } = 0
𝜕𝑄 𝑄 2 𝑟1

𝐷 𝐶𝑐 𝑟2
𝐶𝑜 = {1 − }
𝑄2 2 𝑟1

2𝐶𝑜 . 𝐷
𝑡ℎ𝑒𝑟𝑒𝑓𝑜𝑟𝑒 𝑄 ∗ = √ 𝑟
𝐶𝑐 {1 − 𝑟2 }
1

Example

A company has decided to begin manufacturing a spare part that it has previously been

purchasing from an outside vendor. The demand is 1000 unit/month. The set up cost per run is

$20 and the holding cost is $5 per unit per year.

Once a machine is running it can produce the spare parts at a rate of 2500/month. The company

operates approximately 300 working days in a year.

The management would like to know the production lot size to run, how after production runs

should be made and the total costs associated with the recommended run size.

𝐷 = 1000 × 12 = 12000/ 𝑦𝑒𝑎𝑟

𝐶𝑜 = 20

𝐶𝑐 = 5 / 𝑢𝑛𝑖𝑡/ 𝑦𝑒𝑎𝑟

𝑟1 = 2500/ 𝑚𝑜𝑛𝑡ℎ

𝑟2 = 1000/ 𝑚𝑜𝑛𝑡ℎ

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 2𝑥20𝑥12000
𝑄∗ = √ = 400
1000
5(1 −
2500

𝐷 12000
𝑁∗ = ∗
= = 30
𝑄 400

1 1
𝑡= ∗
= = 0.03
𝑁 30

For Total Cost,

𝑟2
𝑇𝐶 = √2𝐶0 𝐶𝑐 𝐷 {1 − }
𝑟1

= $1200.

For 𝑚

𝑟2
𝑚 = 𝑄 (1 − )
𝑟1

= 240.

SELF- TESTING QUESTION

The XYZ import company imports olives, as well as other items used by specialty restaurants.
The company has determined that the ordering cost of an order of extra Fenly Olives is $ 90 and
the carrying charges are 40% o f the average value of the average value of the inventory. XYZ
buys approximately $ 1,350,000 of the Olives annually. Currently the company is importing the
olives on an optimal EOQ basis, but has been given the option of purchasing the olives for 50%
discount if purchases are made exactly six times a year. Should the company accept this
arrangement?

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