Question

2. The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $50, holding cost is $12 per unit per year, the daily demand rate is 10 and the daily production rate is 100. What is the number of production runs for this problem?

A) 16.54 B) 32.24 C) 17.42 D) 19.83 E) 20.96

Answer 1

2.

Solution:- (D) 19.83

Here,

D= annual demand= 3650

S= Set Up cost = $50

h= holding cost = $12

d=demand rate per day = 10

p= production rate per day = 100

Then,

Then,

Number of production runs are

Hence, the correct options are (D) 19.83 which is the number of production runs

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