Calculate the optimal batch size

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Reference no: EM1384166

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The annual demand for a product is 100,000 units. The annual inventory carrying cost is $5 per unit
and the cost of preparing a batch and making production setup for the batch is $750. The company
operates 250 days per year and has a production rate of 2000 units per day.

1. Calculate the optimal batch size. How many batches are produced in a year?

2. What is the average size of the inventory? What is the annual cost of maintaining this inventory?

Reference no: EM1384166

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