Down Under Dive manufactures rubber diaphams for use in scuba regulators. The annual demand for these rubber diaphams is 20,000 units. Down Under Dive can produce 100 rubber diaphams per hour and the company works an 8 hour day for 250 days each year.
The cost to set up for production of the rubber diaphams is $200. Each rubber diapham costs $0.89. The company uses a rate of 18% of the item cost to determine the annual holding cost. Calculate the economic production quantity.