Question: Foggy Optics, Inc., makes laboratory microscopes. Setting up each production run costs $2500. Insurance costs, based on the average number of microscopes in the warehouse,
Foggy Optics, Inc., makes laboratory microscopes. Setting up each production run costs $2500. Insurance costs, based on the average number of microscopes in the warehouse, amount to $20 per microscope per year. Storage costs, based on the maximum number of microscopes in the warehouse, amount to $15 per microscope per year. If the company expects to sell 1600 microscopes at a fairly uniform rate throughout the year, determine the number of production runs that will minimize the company’s overall expenses.
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