Question

2. Montegut Manufacturing produces a product for which the annual demand is 20,000 units. Production averages 80 units per day, while demand is 30 units per day. Holding costs are $5.00 per unit per year, and setup cost is $250.00. (a) If the firm wishes to produce this product in economic batches, what size batch should be used? (b) What is the maximum inventory level? (c) How many order cycles are there per year? (d) What are the total annual holding and setup costs? (4 points)||

Answer 1

Economic Production Quantity is the number of unit that is added to the inventory which minimize the total inventory cost. It maintain a balance between ordering costs and carrying costs.

2 D - 20,000 writo p = 800 units/day d = 30 units/day H = 85.00/unit/year S = $ 250.00 Epa = 2DS & Sped V * E 2 x 20000 x 250 5.00 800 800 - 30 = ( 1414 213562373095) x (1019294382875251) = 1441.49994031 2894 or 1441 units தெயவு (6) Imare (p. d) 1441 (800 - 30) 300 = 1386.9625 or 1387 units Answer (c) N =D = 20,000 1441 - 13.81 or 14 order cycle / Ansuon,

(d, Total cost Sanual holding cost & Annual etup cast (Iman xH) + (2x) - (1387 * 5) + (20.000 x 250) = 3467.50 + 18 6 957.311 3469-81 NALOG