The cost to set u for producing a standard component is approximately $200. Once set up they

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The cost to set u for producing a standard component is approximately $200. Once set up they can produce at a rate of approximately 500 units/month (6,000 units per year) at a cost of $100 each.

A monthly demand is estimated to be 400 units. If the firm uses 25% annual rate for holding inventory (assume 200 working days per year):

(a) What is the most economical lot size to produce (ERL) ?

(b) What is the average inventory level (units)?

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Quantitative Methods for Business

ISBN: 978-0324651751

11th Edition

Authors: David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey cam

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Question Posted: Apr 13, 2012 07:25 AM

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The cost to set u for producing a standard component is approximately $200. Once set up they

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a Computation of the Economical lot size to produce Given information b Comput...View the full answer

Quantitative Methods for Business

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