Demand for a certain product is 25,000 units/yr. Unit cost is $10.00. Holding cost rate is 30%/yr.

Question:

Demand for a certain product is 25,000 units/yr. Unit cost is $10.00. Holding cost rate is 30%/yr. Changeover (setup) time between products is 10.0 hr, and downtime cost during changeover is $150/hr. Determine
(a) Economic order quantity,
(b) Total inventory costs, and
(c) Total inventory cost per year as a proportion of total production costs.