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polar_ctr polar_ctr
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Posts: 1436
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7 years ago
A production manager is making a decision on batch size for a product with an annual demand of 25,000 units per year. The setup cost for each batch is $45 and once the setup is complete, the product may be produced at the rate of 650 units per day. There is a holding cost of $2 per unit per year and the plant operates on a 250-day production year. How big should the production batch be and how long (in days) will it take to produce the batch?
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#1
Educator
7 years ago
ELS = sqrt((2DS/H))sqrt((p/p - d)) = sqrt((2(25000)45/2))sqrt((650/(650 - 100))) = 1,153 units

Production time = (ELS/p) = (1153/650) = 1.77 days
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