Demand for a product occurs at a constant rate of 24,000 units/year. The production rate is 72,000 units/year. The setup cost is $800, while the inventory carrying cost is $10/unit/year. Assume 360 days/year.
a. Find the optimal batch size.
b. What is the average inventory?
c. Find the production run length.
d. For how many days in each cycle is the equipment idle (available to make other products)?
E. Suppose the supplier offers a discount of 2% if the order quantity is at least 500 units. What is the best order quantity? Assume the product costs $10/unit at full price.