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nirvana33 [79]
3 years ago
12

A publishing company sells 1,250,000 copies of certain books each year. It costs the company $1 to store each book for a year. E

ach time it must print additional​ copies, it costs the company $250 to set up the presses. How many books should the company produce during each printing in order to minimize its total storage and setup​ costs
Business
1 answer:
Basile [38]3 years ago
8 0

Answer:

The Company should produce 25,000 books

Explanation:

The production size that minimizes total storage and setup costs is known as the optimum batch size.

Optimum batch size = √(2 × Annual Production Demand × Set up Cost) / Storage Cost per unit

                                  = √ (2 × 1,250,000 × $250) / $1

                                  = 25,000 books

Conclusion :

The Company should produce 25,000 books during each printing in order to minimize its total storage and setup​ costs.

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