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Company A produces a high-quality desks. Monthly demand for the desks are 25,000 units. The firm...

Company A produces a high-quality desks. Monthly demand for the desks are 25,000 units. The firm has capacity to produce 50,000 units/month. The setup cost to produce desks are $3,000.00. Annual holding cost is $400 each unit. Lead time is 2 days. The firm operates 300 days per year.

1.) Calculate the EPQ.

2.) Total costs of the EPQ policy.

3.) Calculate reorder point.

4.) Describe the policy.

Please show all work!

business   Operations-Management   
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Answer #1

Economic Production Quantity DATE: I 3 幻 an 2 ol unti E PaEconomic Production Quantity is used to minimize the total sum of annual inventory cost consisting annual setup cost as well as annual inventory holding cost. In a production run EPQ quantity is produced and the inventory cost becomes economical at EPQ.

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