Nicolas has a business in which he manufactures LED lamps that he then sells wholesale. The plant has three machines that he uses to produce the lamps, each with a production capacity of 500 lamps per month at a cost of $2.50 each. The annual demand for these lamps is 5,000 units. A cost of $100 is incurred to start the production line. The warehouse manager estimates that the cost of holding inventory is about $0.50 per unit per year. If the plant is operating at 80% of its capacity. Find:

The Inventory Model that best fits this situation 

The optimal production lot, the maximum inventory, the supply time, the stock out time, the number of production runs per year, the cycle time and the annual cost of the optimal policy 

If the start-up time is 30 days. Calculate reorder point

If the warehouse has a maximum storage capacity of 800 units. Indicate if the previously calculated production lot size changes. 

For all calculations assume that 1 year = 355 days

Answer rating: 100% (QA)

To determine the inventory model and answer the questions you can use the Economic Order Quantity EOQ model The EOQ model helps find the optimal order ... View the full answer