What is the optimal batch size

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Question: A company produces several types of metallic products. One of them is a can for drinks, which as a demand of 50000 cans per month (a month has 160 h). The production rate is 1200 cans per hour. It takes 2 hours to prepare the assembly line for producing this type of can when another kind of product is being produced (setup time). The setup cost is estimated at 250€ per hour. The monthly holding cost is 0.1€ per can. Answer the following questions: i) What is the optimal batch size? ii) What is the variable cost and the total cost corresponding to the optimal batch size? iii) What is the maximum inventory level? iv) What is the reorder level?

Reference no: EM133344284

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