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sleet_krkn [62]
3 years ago
7

A company uses the finite replenishment model to determine the optimal quantity to produce. There are days a year over which dem

and and production occur. The daily demand is ​, and the production rate is per day. The setup cost for production is ​$ per setup. Assuming that the carrying cost is percent of the​ item's ​$ ​cost, what is the​ length, in​ days, of a production run if the company produces the replenishment quantity that minimizes its​ inventory-related costs?
Business
1 answer:
SVEN [57.7K]3 years ago
8 0

Answer:

16.1 days

Explanation:

Note: The full question is attached as picture below

Daily demand d = 520

Annual demand D = 520*250 = 130000

Setup cost S = $680

Production rate p = 875

Holding cost H = 0.25*25 = 6.25

Optimal order quantity Q

Q = \sqrt{2DS/H} \sqrt{p / p -d}

Q = \sqrt{(2*130000*680)/6.25}   \sqrt{875/875-520}

Q = 8350

Length of production run = Q/d

Length of production run = 8350/520

Length of production run = 16.05769230769231

Length of production run = 16.1 days

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