How many speakers should be produced

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Reference no: EM132223127

Television sets are made at a rate of 18,951 per month(1 speaker per set). The speakers come in batches so the speakers are placed into inventory until they are needed for assembly into television sets on the production line. The company is interested in determining when to produce a batch of speakers and how many speakers to produce in each batch.

Given:

setup cost to tool the line to produce a batch: $19,334

unit production cost: $4.05

shortage cost: $6.18 per speaker

holding cost (interest and unit cost) to keep a speaker in stock: $0.63 per month which includes the cost of capital per month.

How many speakers should be produced?

Reference no: EM132223127

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