Answer:
a.
4,730 units
b.
16 production runs
c.
1 day
Explanation:
a.
Use the following formula to calculate the optimal run size
Optimal run size = Economic production quantity = [tex]\sqrt{\frac{2 D S }{H} }[/tex] x [tex]\sqrt{\frac{p}{p - d}}[/tex]
Where
D = Annual Demand = Daily demand x Numbers operating days = 250 x 295 days = 73,750
S = Ordering cost = $65
H = Holding cost = $0.45 per unit
p = Daily production = 5,250 per day
d = daily dmand = 250 per day
Placing values in the formula
Optimal run size = [tex]\sqrt{\frac{2 X 73,750 X 65 } {0.45} }[/tex] x [tex]\sqrt{\frac{5,250}{5,250 - 250}}[/tex]
Optimal run size = 4,615.79 x 1.0246951 = 4,729.77 = 4,730 units
b.
Numbers of production run = Demand / Optimal run size = 73,750 / 4,730 = 15.5919 production runs = 16 production runs
c.
Length (in days) of a run = Optimal run size / Daiy production = 4,730 / 5,250 = 0.901 days = 0.90 days = 1 days
