Determine the economic run size and maximum inventory


A shop that makes candles offers a scented candle, which has a monthly demand of 360 boxes. Candles can be produced at a rate of 36 boxes per day. The shop operates 20 days a month. Assume that demand is uniform throughout the month. Setup cost is $60 for a run, and holding cost is $2 per box on a monthly basis.

Determine the following:

(A) the economic run size
(B) the maximum inventory
(C) the number of days in a run

The daily usage rate (u) is 18 boxes. The daily production rate (p) is 36 boxes.

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Operation Management: Determine the economic run size and maximum inventory
Reference No:- TGS084865

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