Question

Please answer all of them

Pough Publishing Company produces books for the retail market. Demand for a current book is expected to occur at a constant annual rate of 7200 copies. The cost of one copy of the book is $14. 50. The holding cost is based on an 18% annual rate, and production set up costs are $150 per set up. The equipment on which the book is produced has an annual production volume of 25,000 copies. Pough has 250 working days per year, and the lead time for a production run is 15 days. Use the production lot size model to compute the following values:

1. Minimum cost production lot size
2. Number of production runs per year
3. Cycle time
4. Length of a production run
5. Maximum inventory
6. Total annual cost
7. Reorder point

Answer 1

Economic Production Quantity is the number of unit that is added to the inventory which minimize the total inventory cost. It maintain a balance between ordering costs and carrying costs.