Assume that a production line operates such that the production lot size model of Section 10.2 is applicable. Given D = 6400 units per year, Co = $100, and Ch = $2 per unit per year, compute the minimum cost production lot size for each of the following production rates:
a. 8000 units per year
b. 10,000 units per year
c. 32,000 units per year
d. 100,000 units per year
Compute the EOQ recommended lot size using equation (10.5). What two observations can you make about the relationship between the EOQ model and the production lot size model?
Text Book: An Introduction to Management Science: Quantitative Approaches to Decision. By David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey Camm, James Cochran.