Consider a Product with a Daily Demand of 400 Units,a

question 60

Essay

Consider a product with a daily demand of 400 units,a setup cost per production run of $100,a monthly holding cost per unit of $2.00,and an annual production rate of 292,000 units.The firm operates and experiences demand 365 days per year.Suppose that management mistakenly used the basic EOQ model to calculate the batch size instead of using the POQ model.How much money per year has that mistake cost the company?

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