Question: Component Pte Ltd forecast demand for a component at around 1,250 units annually. They manufacture 10,000 units of the component a year with the following

Component Pte Ltd forecast demand for a component at around 1,250 units annually. They manufacture 10,000 units of the component a year with the following costs for each production run: - set up cost of $250 - variable cost of $15 a unit. - holding cost at 20 percent of value a year. Lead time is one month from receiving a production requisition until the unit is produced.

What is the optimal variable cost?

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