Management of James Machine Shop has been quite concerned as to the optimum production run. It produces special die castings for a customer who yearly orders 20,000 Type I castings and 25,000 Type II castings. Rather than manufacture these castings as the orders are received monthly from the customer, management believes that the customer will continue purchasing so James can manufacture in larger lots. The setup cost for Type I castings is

$600 and $450 for Type II castings. Carrying costs are estimated to be 12 percent per year.

The production cost per Type I casting is $8 and $10 for Type II casting.

Required:

Compute the most economical production run size for each type of casting. Also indicate the number of production runs per year for each type of casting.