An operation manager of a chemical manufacturing plant must determine the lot size for a chemical that has a steady demand of 1,450 litres per day. The production rate is 6,850 litres per day, setup cost is $200, annual holding cost is $0.21 per litre, and the plant operates 350 days per year.
Determine the duration of the active production interval, t. Determine the maximum inventory. Determine demand during the production interval.