A Production Manager Uses the Economic Lot Size Approach to Determine

question 40

Essay

A production manager uses the economic lot size approach to determine the batch size for a product with an annual demand of 20,000 units per year. The setup cost for each batch is $50 and once the setup is complete, the product may be produced at the rate of 800 units per day. There is a holding cost of $2 per unit per year and the plant operates on a 250-day production year. If the machine used to produce this product is needed for another item and it takes one day to set up regardless of product, how many production days are available for production of the new item?

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Definitions:

Customer Benefit

The advantage or value a customer receives from using a product or service, contributing to their satisfaction and loyalty.

Product

Any item or service offered in the market for acquisition, use, or consumption, including physical goods, digital products, or services.

Premium

A term often used to describe products or services of higher quality or cost, often offering additional features or benefits.

Demonstration

A practical display or explanation of how a product or service works, often used in sales to highlight benefits to potential customers.