The Great American Tire Co. expects to sell 600,000 tires of a particular size and grade during the next year. Sales tend to be roughly the same from month to month. Setting up each production run costs the company $15,000. Carrying costs, based on the average number of tires in storage, amount to $5 per year for one tire.

(a) Determine the costs incurred if there are 10 production runs during the year.

(b) Find the economic lot size (that is, the production run size that minimizes the overall cost of producing the tires).