Compute the optimal size of production run

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The 3M incorporate produces solar cell panels, and the production rate can be 8,000 pieces per day. The demand for the solar panel is 30,000 pieces per month. The fixed cost of setting up a production run is $1,500. The variable cost of production is $100 per item. The holding costs are based on 25% annual interest rate. Assume there are 250 working days a year.

a) What is the optimal size of production run for this kind of solar cell panel?
b) what proportion of each production cycle consists of uptime and what proportion consists of downtime?

Reference no: EM13107753

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