Rolf Steps is the production manager for a local manufacturing firm.This company produces staplers and other items.The holding cost is $2 per unit per year.The cost of setting up the production line for this is $25.There are 200 working days per year.The production rate for this product is 80 per day.If the production order quantity is 200 units,what was the daily demand (rounded to the nearest whole unit)?
A)6 units
B)7 units
C)8 units
D)9 units
E)None of the above

Question

Quizplus · Accepted Answer

The Economic Production Quantity (EPQ) formula is used to determine the optimal production order quantity. Given the production order quantity of 200 units and a production rate of 80 units per day, the daily demand can be calculated as: Daily Demand = (Production Order Quantity * Production Rate) / (Production Order Quantity + Holding Cost). Solving this gives a daily demand of approximately 7 units.

Rolf Steps Is the Production Manager for a Local Manufacturing