Main Street Microbrewery makes its own beer which it bottles and sells in its adjoining restaurant. It costs $1,000 to set up, brew and bottle a batch of the beer. The annual cost to store the beer in the inventory is $2.00 per bottle. It sells the beer at a steady rate of 18,000 bottles annually. The brewery has the capacity to produce 30,000 bottles annually. Suppose the brewery and the restaurant operates 250 days per year.
1. What inventory model is appropriate for this model?
a. EOQ model
b. EPQ model
c. Discount Quantity model
d. Periodic review model
2. What is the optimal batch size for each production run (brewing) for the beer?
a. 6,708 bottles
b. 7,746
c. 8,150
d. 8,944
3. What is the annual cost of holding and set up?
a. $4,472
b. $5,164
c. $4,648
d. $5,367
4. How many times per year the beer is produced?
a. 2.68
b. 2.58
c. 2.24
d. 2.32
5. How many working days is it between production runs?
a. 108 days
b. 112 days
c. 97 days
d. 93 days