A toy manufacturer started a new production plant. The plant manager wishes to optimize the inventory costs of the company’s best-selling doll. The monthly demand for the doll is 1000 and the plant works 240 days per year. The plant can produce the doll at a rate of 100 dolls per day. The cost to prepare the equipment to start a production run is $160 and the annual inventory carrying cost is $3 per year.

(a) What is the optimum quantity of dolls to produce?

(b) What is the maximum inventory achieved during a production run?

(c) How many production runs are needed to meet the annual demand?

(d) What is the length of a production run?

(e) What is the average inventory of the doll?

(f) What is the total annual cost of producing and storing?

Answer rating: 100% (QA)

a The Economic Order Quantity EOQ formula can be used to calculate the optimum quantity of dolls to ... View the full answer