- The demand for an item is deterministic and constant over time and it's equal to 24000 units per year. And the company can produce the item at rate of 4000 per month. The cost of one set up is $600 and the holding cost is $0.20 per unit per month. The shortage cost of one unit is $300 per year. Determine: The optimal manufacturing quantity and the number of shortages - The manufacturing time and the time between set ups " Max inventory level - Min total cost if the cost of an item is $25 per unit