The cost to set up for producing a standard component is approximately $200. Once set up they can produce at a rate of approximately 500 units/month (6,000 units per year) at a cost of $100 each. A monthly demand is estimated to be 400 units. If the firm uses 30% annual rate for holding inventory (Assuming 200 working days per year):
(a) What is the most economical lot size to produce (ERL)?
(b) What is the average inventory level (units)? (2 pts.)
(c) What is the inventory rate (i.e., the proportion of production that goes into inventory)?
(d) What is the total inventory cost (=setup cost + carrying cost each)?
(e) What is the approximate length of a production run cycle in days?
(f) What is the number of days for production in days?