A pillow manufacturer also operates a factory outlet store. The manager wishes to optimize the inventory costs of the company's super puff pillow. The plant can produce this pillow at a rate of 400 super puff pillows per day and the plant works 21 days per month. Monthly demand fo the super puff pillow is 4,500 units. The cost to setup the equipment to and make a production run is $250 and the annual inventory carrying cost is $4.20 per year. The store is closed on Sundays.
What is the optimum quantity of super puff pillows to produce? (EPQ Formula)
What is the maximum inventory achieved during a production run?
How many production runs are needed to meet the annual demand?
What is the length of a production run?
What is the total annual cost of producing and storing the company's super puff pillow?