Bee's Candy manufactures a variety of candy bars in a number of different sizes. One of its more popular products is the three-ounce Smirk bar. Bee's forecasts that demand for this product should be fairly constant over the next year, totaling 21 million bars.
The candy production line, which operates 24 hours a day, 365 days a year, is capable of producing three candy bars per second and per unit cost is $1.00. A production setup for the three-ounce Smirk bar takes 50 minutes and costs approximately $450. The annual holding cost of a three-ounce Smirk bar is estimated as $0.12.
a. What is the optimal production batch size and the length of a production run in hours (including setup time)?
b. What is the total annual inventory holding and production setup cost for this policy?
c. What is the number of days between the start times of successive production runs?
d. How would your answers to part (a) change if the annual holding cost decreased to $0.10 per bar?