A pharmaceutical company supplies 7,000 dialysis machines per year, and has a production capacity of 15,000 machines / year. They can be purchased for $ 500 per unit or produced in-house. The cost of production is $ 420 per Unit. The setup cost is $ 1200, while issuing a purchase order costs $ 300. The cost of maintaining inventory is 25% per year.
a) Calculate the lot size for both situations
b) Estimate the average inventory and the maximum inventory in each case.
c) In the case of producing it internally, how long does it take to manufacture the batch?
d) What is the average annual cost of both policies? What is your decision in this regard?
e) For both inventory policies, graph the inventory level over time, indicate all relevant values (Q *, T), average inventory and maximum inventory level

Answer rating: 100% (QA)

In the given question the company have two options to meet the demand of dialysis purchasing or in h... View the full answer