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Question: A product is sold at an average rate of 45 per day and can be manufactured at a rate of 450 per day. The set-up cost of the machine to produce the product is £1000 per batch and the stock-holding cost is 20% per annum of stock value. Let labour charges be 40p, materials 50p and overheads 60p per piece.
1. Determine the EOQ and the total costs per day.
2. Determine the cost per item including all inventory costs (order plus stockholding) and production costs.
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