Question: A local company produces an erasable programmable read - only memory ( EPROM ) for several industrial clients. It has experienced a relatively flat demand

A local company produces an erasable programmable read-only memory (EPROM) for several industrial clients. It has experienced a relatively flat demand of 2,500 units per year for the product. The EPROM is produced at a rate of 10,000 units per year. The accounting department has estimated that it costs $50 to initiate a production run, each unit costs the company $2 to manufacture, and the cost of holding is based on a 30 percent annual interest rate. Determine the optimal size of a production run, the length of each production run, and the average annual cost of holding and setup. What is the maximum level of the on-hand inventory of the EPROMs?

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