A company manufactures three sizes of lightning rods. Ordering costs and carrying costs are not known, but it is known that they are the same for each size. Each size is produced six times per year. If the demand for each size is as follows, calculate order quantities to minimize inventories and maintain the same total number of runs. Calculate the old and new average inventories. Is there any change in the number of orders per year?

Transcribed Image Text:

Present New Orders New Lot Size = KVA, per Year N = Ap/Q Annual Orders Present VA, Item Usage per Year Lot Size $22,500 $7225 6. 3 $1600 Total Average Inventory 6. 2.