a) The minimum production lot size is <u>884 units</u>,
b) The number of production runs per year is <u>10 runs</u>.
c) The cycle time is <u>30 day</u>s (10 x 3)
d) The length of a production run is <u>3 days</u>.
e) The Maximum inventory is <u>653 units</u>.
f) The total annual cost is <u>$1,523,180</u>.
g) The Reorder point is <u>99 units</u> (33 x 3).
<h3>What is the production lot size model?</h3>
The production lot size model is the same as the economic order quantity model, which is given as the EOQ = square root of: [2(setup costs)(demand rate)] / holding costs
The model shows the production lot size that minimizes total costs.
<h3>Data and Calculatiaons:</h3>
Annual demand = 9,200 units
Unit product cost = $165
Holding cost = $9.90 ($165 x 6%)
Setup costs = $420
Annual production capacity = 16,000 units
Working days per year = 280 days
Lead time for a production run = 3 days
EOQ = square root of: (2 x $420 x 9,200)/$9.90
= square root of 780,606
= 884 units
Production runs per year = 10 (9,200/884)
Daily demand = 33 units (9,200/280)
Total annual cost = ($165 x 9,200 + 99 x $9.90 + $420 x 10)
= $1,523,180 ($1,518,000 + $980. + $4,200)
Maximum inventory = Reordering Level + Reorder Quantity – (Minimum Consumption x Reorder period)
= 99 + 884 – (33 x 10)
= 653 units
Learn more about the production lot size model at brainly.com/question/17276797
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