Find the inventory rate proportion of production inventory


The cost to set u for producing a standard component is approximately $200. Once set up they can produce at a rate of approximately 500 units/month (6,000 units per year) at a cost of $100 each. A monthly demand is estimated to be 400 units. If the firm uses 25% annual rate for holding inventory (assume 200 working days per year):

(a) What is the most economical lot size to produce (ERL) ?

(b) What is the average inventory level (units)?

(c) What is the inventory rate (i.e., the proportion of production that goes into inventory)?

Request for Solution File

Ask an Expert for Answer!!
Microeconomics: Find the inventory rate proportion of production inventory
Reference No:- TGS068744

Expected delivery within 24 Hours