Problem 20.23 (Algorithmic) EOQ, Safety Stock, Lead Time, Batch Size, and JIT

Bateman Company produces helmets for drivers of motorcycles. Helmets are produced in batches according to model and size. Although the setup and production time vary for each model, the smallest lead time is six days. The most popular model, Model HA2, takes two days for setup, and the production rate is 825 units per day. The expected annual demand for the model is 39,600 units. Demand for the model, however, can reach 49,500 units. The cost of carrying one HA2 helmet is $3 per unit. The setup cost is $6,600. Bateman chooses its batch size based on the economic order quantity criterion. Expected annual demand is used to compute the EOQ.

Recently, Bateman has encountered some stiff competition