$3$:$23$

A flour mill produces general purpose baking flour in $100lb.$ bags. Demand for this product is $25$ tons per day. The capacity for producing the product is $50$ tons per day. The setup cost for a "run" to make the flour costs $$100,$ and storage and handling costs are $$4$ per ton a year. The firm operates $250$ days a year. $($Hint: $1$ ton $=2000lbs.$ and you should work the problem in "bags"$)$

Answer each of the following in the space provided:

How many bags per run are optimal? $(3$ points$)$

What would the average inventory be for this lot size? $(2$ points$)$

Determine the approximate length of a production run, in days. $(1$ point$)$

About how many runs per year would there be$?(1$ point$)$

How much could the company save annually if the set$-$up cost could be reduced to per run? $(3$ points$)$