Assume that a production line operates such that the production lot size model of Section 14.2 is applicable. Given D = 6400 units per year, Co = $100 and Ch = $2 per unit per year, compute the minimum cost production lot size for each of the following production rates:
a. 8000 units per year
b. 10,000 units per year
c. 32,000 units per year
d. 100,000 units per year
Compute the EOQ recommended lot size using equation. What two observations can you make about the relationship between the EOQ model and the production lot size model?

Transcribed Image Text:

20 2DCo Съ