Demand for an item is constant at 3,600 units a year. The item can be made at
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Question:
Demand for an item is constant at 3,600 units a year. The item can be made at a constant rate of 7,000 units a year. Unit cost is $100, batch set-up cost is $1300 and holding cost is 30 per cent of value a year. What is the optimal batch size for the item? If production set-up time is 2 weeks, when should this be started?
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