Kellam Images prints snack food bags on long rolls of plastic film. The plant operates 250 days a year. The daily production rate is 6,000 bags and the daily demand is 3,500 bage sold at $2 each. The cost to set up the design for printing is $300. The holding cost is estimated at 1% of the price of a bag per day. Show your work.
A) What is the optimal production lot-size (economic production quantity, EPQ)?
B) What is the optimal number of production runs per year (optimal production frequency)?
C) What is the optimal time between set-ups (optimal cycle time) in days?
D) Find the optimal (minimum) total cost.
E) Find the optimal maximum inventory.
F) Find the optimal average inventory.