A chemical plant produces sodium bisulfate in 100 kg bags. Demand for this product is 28 tonnes per day. The capacity for producing this product is 60 tonnes per day. Setup cost is $420, and holding cost is $200 per tonne per year. The company operates 260 days a year. (Note: 1 tonne = 1,000 kg). a. What is the optimal number of bags per production run? (Round your intermediate calculations to 2 decimal places and the final answer to the nearest whole number.) b. What would the average inventory level be for this lot size? (Round your intermediate calculations to 2 decimal places and the final answer to the nearest whole number.) c. Determine the approximate length of a production run, in days. (Round the intermediate calculations and final answer to 2 decimal places.) d. About how many production runs per year would there be? (Round your intermediate calculations to 2 decimal places and the final answer to 1 decimal place.) e. How much could the company save annually in inventory control cost if the setup cost could be reduced to $210 per production run and the optimal production quantity is recalculated and used? (Round the intermediate calculations and final answer to 2 decimal places.)

Answer rating: 100% (QA)

a To determine the optimal number of bags per production run we need to calculate the Economic Order Quantity EOQ using the following formula EOQ 2 De... View the full answer