Montegut Manufacturing produces a product for which the annual demand is 10,000 units. Production averages 100 per day, while demand is 40 per day. Holding costs are $2.00 per unit per year; set-up costs $200.00. If they wish to produce this product in economic batches, what size batch should be used?
What is the maximum inventory level?
How many order cycles are there per year?
How much does management of this good in inventory cost the firm each year?

Question

Montegut Manufacturing produces a product for which the annual demand is 10,000 units. Production averages 100 per day, while demand is 40 per day. Holding costs are $2.00 per unit per year; set-up costs $200.00. If they wish to produce this product in economic batches, what size batch should be used?
 What is the maximum inventory level?
 How many order cycles are there per year?
 How much does management of this good in inventory cost the firm each year?

Quizplus · Accepted Answer

The Answer of Montegut Manufacturing produces a product for which the annual demand is 10,000 units. Production averages 100 per day, while demand is 40 per day. Holding costs are $2.00 per unit per year; set-up costs $200.00. If they wish to produce this product in economic batches, what size batch should be used?
 What is the maximum inventory level?
 How many order cycles are there per year?
 How much does management of this good in inventory cost the firm each year?

Montegut Manufacturing Produces a Product for Which the Annual Demand