Kellam Images prints snack food bags on long rolls of plastic film. The plant operates 250 days a year. The daily production rate is 6000 bags, and the daily demand is 3500 bags. The cost to set up the design for printing is $300. The holding cost is estimated at 2 cents per bag.
a. What is the recommended production lot size?
b. If there is a five-day lead time to set up the line, what is the recommended reorder point?