What is the economic production size

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Reference no: EM13856646

A company produces a product that requires part X in its construction. The company plans on building 2500 units of the product over the next year, and therefore, has a need for 2500 units of part X. The cost of placing an order for part X is $15, and each unit cost $4 per year to carry in inventory. Each part X has a cost of $30.

A. What is the EOQ?

B. The company has the capability of producing part x internally. It estimates a setup cost of $250 per production run. The production rate would be 4800 units of part X per year. What is the economic (run) production size? (One year = 250 days)

Reference no: EM13856646

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