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Question - Carl's Custom Cans produces small containers which are purchased by candy and snack food producers. The production facility operates 350 days per year and has annual demand of 12,600 units for one of its custom cans. They can produce up to 160 of these cans each day. It costs $45.66 to set up one of their production lines to run this can. (Carl pays $13 per hour for setup labor.) The cost of each can is $2.55 and annual holding costs are $2.20 per can.
What is the optimal size of the production run for this can? Whole number
How many production runs will be required each year in order to meet the annual demand? Whole number
Suppose the customer for this custom can wants to purchase in quantities of 700 units. What is the required setup cost to make this order quantity an optimal production run quantity for Carl's Custom Cans?
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