Question: Suppose that Demand rate (D) = 30 per unit time Holding cost (h) = $1 per unit at each unit time Fixed ordering cost (A)

Suppose that

Demand rate (D) = 30 per unit time

Holding cost (h) = $1 per unit at each unit time

Fixed ordering cost (A) = $30 each time

Product cost (c) = $1 each item

You can invest in one of the two machines for the production:

A) Production rate = 50 per unit time. The machine costs $100 to operate per unit of time when it is on.

B) Production rate = 120 per unit time. The machine costs $150 to operate per unit of time when it is on.

Which machine do you want to have (Enter: A or B)?Blank 1 What would be your average cost (round to integer)?Blank 2

Hint: Calculate the Average cost of inventory and order for each scenario Y(Q*). Then, calculate the operating cost of the machine for the two scenarios (e.g., the percentage time the machine is busty is also the utilization rate). Find out the sum to determine the answer.

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