Al-Arabi Manufacturing Company manufactures different types of knobs for doors in its manufacturing facility in 6th of October, Egypt. The company operates its production facility 250 days per year. The demand for the steel knobs is 25,000 units per year, while the daily production capacity of the facility is 500 units per day. The cost of each steel knob is E£200, the annual holding cost is E£3 per knob and the setup cost is E£1,500.
a) What is the optimal size of the production run?
b) What is the average holding cost per year?
c) What is the average setup cost per year?
d) What is the total cost per year, including the cost of the knobs?