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A shop that makes candles offers a scented candle, which has a monthly demand of 360 boxes. Candles can be produced at a rate of 36 boxes per day. The shop operates 20 days a month. Assume that demand is uniform throughout the month. Setup cost is $60 for a run, and holding cost is $2 per box on a monthly basis.
1. What is the daily usage rate?
2. What is the annual demand?
3. What should be the optimum quantity of scented candles to produce?
4. What is the maximum inventory achieved during a production run?
5. What is the average inventory of scented candles throughout the year?
6. What is the cycle time?
7. What is the length of a production run in days?
8. What is the total annual cost of producing and storing the scented candles?
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