The cost to set up for producing a standard component is approximately $300. Once set up they can produce at a rate of approximately 20 units/day (5,000 units per year) at a cost of $100 each. Annual demand is forecast at 2,000 units. If the firm uses 30% annual rate for holding inventory:
What is the most economical lot size to produce(ERL)? Square root ( 2 x Cs x D/ Ch X ( 1 – d/p) )
a. 200 b. 258.2 c. 1,000 d. 346.41 e. None
What is the average inventory level (units) ?
a. 77.46 b. 100 c. 129.1 d. 154.92 e. None
What is the level of inventory (i.e., the proportion of production that goes into inventory)?
a. 0.25 b. 0.4 c. 0.6 d. 0.75 e. None
What is the total inventory carrying costs ?
a. $1,080 b. $2,323.80 c. $3,873 d. $7,746 e. None
What is the total number of days spent for production?
a. 2.5 days b. 10 days c. 12.91 days d. 50 days e. None