Question
A firm produces shampoo, with an annual projected demand of 8,000 bottles. The annual inventory holding cost is $0.5 per bottle, and the cost of
A firm produces shampoo, with an annual projected demand of 8,000 bottles. The annual inventory holding cost is $0.5 per bottle, and the cost of preparing an order and setting up production for each order is $1,000. The company operates 250 days per year, and the production rate is 2,000 bottles per day. a) Calculate the optimum lot size.
a) Calculate the optimum lot size
b) How many lots are produced in a year? c) What is the average inventory for the firm? d) What is the total annual cost that firm incurs? e) Graphically illustrate the impact of production lot size on annual set-up cost, annual holding cost, and total annual cost.
PLEASE USE EXCEL AND SHOW WORKING OUT AS WELL AS THE GRAPH FOR PART E
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