Recalling that the setup cost for the single print run is $5,000, the cost of producing 1,200,000 books at $1 each is $1,200,00, the total cost for the year would be given by, C = (Setup Costs) + (Production Costs) + (Storage Costs) = $5000 + $1,200,000 + $72,000 = $1,277,000

1. You have an idea. To cut down on storage costs you will print the book in two print runs of 600,000 each, as shown in the figure below.

A) What are the setup costs for two print runs?

B) What are the production costs?

C) What are the storage costs?

D) What is the total cost for the year?

2. It appears to you that increasing the number of print runs reduces total costs for the year. Motivated by this idea, you decide to divide the 1,200,000 books into a twelve-monthly production runs of 100,000 books each.

A) Create a graph similar to the one in Problem #1. Use graph paper and include the graph for your work in this part (You can glue the graph to your paper if necessary). Label both axes as in the graph above (you will have to modify the y-axis values for this part but should use the same x-scale).

B) What are the setup costs for twelve (monthly) print runs?

C) What are the production costs?

D) What are the storage costs?

E) Fill in the amounts from your work above and compute the total costs for the year: C = (Setup Costs) + (Production Costs) + (Storage Costs)

Thank you!

Books in stock 600,000 500,000 Average number 400,000 in stock 300,000 200,000 100,000 0 0 1 2 3 4 5 6 7 8 9 10 11 12 Month Books in stock 600,000 500,000 Average number 400,000 in stock 300,000 200,000 100,000 0 0 1 2 3 4 5 6 7 8 9 10 11 12 Month