Chad recently moved back to Newfoundland and started a micro-brewery in his home town of Rocky Harbour. Currently he is bottling 500 bottles per week; he uses a unique 500 ml bottle. Demand for the beer averages 400 bottles a week. To prepare the equipment for bottling costs $20 per set up and it costs Chad an average of $1 per bottle to store the bottles in his facility. Chad operates 7 days a week and 52 weeks a year.

a) What is the optimal quantity for a production run? Indicate the quantity in litres and bottles. What is the total annual inventory cost at this optimal quantity?

b) What is the duration of each production run? What is the length of each Cycle? How many production runs are there a year based on the optimal quantity in a)?

c) One of Chads friends, Steph, operates her own micro-brewery in Woody Point. Stephs bottling equipment just broke and she has asked Chad if she could use his equipment when it is not in use. Chad knows it will take a day to set up the equipment for Stephs bottles and 2 days to do Stephs bottling. Does Chad have time available to let Steph use his equipment?