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Catracho Catracho
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4 years ago Edited: 4 years ago, bio_man
Race One Motors is an Indonesian car manufacturer. At its largest manufacturing facility, in Jakarta, the company produces subcomponents at a rate of 300
per day, and it uses these subcomponents at a rate of 12,500 per year (of 250 working days). Holding costs are $2.00 per item per year, and ordering costs are
$30.00 per order.

a) What is the economic production quantity? units (round your response to two decimal places).
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Staff Member
4 years ago
found the solution to the exact same question, but different numbers

hope this helps Slight Smile
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- Master of Science in Biology
- Bachelor of Science
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bio_manbio_man
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4 years ago
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wrote...
Staff Member
4 years ago
Thanks for correcting.

Not all of them are wrong, just A, B, and E.
- Master of Science in Biology
- Bachelor of Science
Catracho Author
wrote...
4 years ago
found the solution to the exact same question, but different numbers hope this helps Slight Smile
All answers are wrong because of a mistake in (A). \(EPQ=\frac{\sqrt{2\cdot annual\ demand\ \cdot \ setup}}{H\left(1-\frac{d}{p}\right)}\) Answer is 670.82
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4 years ago Edited: 4 years ago, bio_man
No of Production runs per year =  Annual Demand / EPQ

No of Production runs per year =  12,500 per year / 670.82 = 18.63

Answering the others now...
Catracho Author
wrote...
4 years ago
No of Production runs per year = Annual Demand / EPQ No of Production runs per year = 12,500 per year / 670.82 = 18.63 Answering the others now...
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wrote...
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4 years ago
Maximum Inventory Level = P ( Q / P ) -d ( Q / P )

P = production rate = 300
d= Daily Demand Rate = 12500 / 250 = 50 units per day
Q = P * t (total days) = 250 * 300 = 75000

Maximum Inventory Level = 300 ( 75000 / 300 ) - 50 ( 75000 / 300 ) = 75000 - 12500 = 62500
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