A Production Manager Is Making a Decision on Batch Size

question 46

Essay

A production manager is making a decision on batch size for a product with an annual demand of 25,000 units per year. The setup cost for each batch is $45 and once the setup is complete, the product may be produced at the rate of 650 units per day. There is a holding cost of $2 per unit per year and the plant operates on a 250-day production year. How big should the production batch be and how long (in days) will it take to produce the batch?

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Definitions:

Central Nervous System

The part of the nervous system consisting of the brain and spinal cord, which coordinates and controls body activities.

Conception

The process of fertilization where a sperm combines with an egg to form a zygote.

Birth

The process of childbirth; marking the emergence of a baby from the mother's womb into the world.

Germinal Period

The period in prenatal development from conception to two weeks after conception, when the zygote divides rapidly and implants in the uterine wall.