Question

A manufacturer has a steady annual demand for 38016 cases of sugar. It costs $9 to store 1 for 1 year, $33 in set up cost to produce each batch, and $18 to produce each case. Find the number of cases per batch that should be produced to minimize cost.

Answer 1

Based on the setup costs, the steady annual demand, and the costs to store, the number of cases to produce to minimize cost is 528 units .

How many cases should be produced to minimize cost?

This can be found by using the Economic Order Quantity.

= √ ( (2 x Setup costs x annual demand) / holding costs for the year)

Solving gives:

= √ ( ( 2 x 33 x 38,016) / 9)

= √278,784

= 528 units

Find out the economic order quantity at brainly.com/question/26814787.

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