Question $2$

An item is manufactured in batches within a manufacturing facility and the following data is

applicable:

Consumption rate: $500$ items$/$ month

Production rate: $1500$ items$/$ month

Storage costs $($based on average inventory$)$: $$10$ per unit$-$year

Interest charges: $$5$ per unit$-$year

Setup charges per batch: $$200$

The batch is produced so that it is completed exactly when the previous batch is depleted.

A$)$ Determine the EMQ value and associated inventory costs per unit.

B$)$ For the item given in the previous problem, assume that the batch is to be completed

$0\mathrm{.}2$ month before the previous batch is depleted. Determine the EMQ value and the

associated inventory costs per unit.