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:

Glowing Orange

Refers to the bright orange color typically emitted by hot materials or objects, such as molten lava.

Actively Erupting

A volcanic state characterized by ongoing expulsion of lava, ash, or other volcanic material.

Conical-Shaped Hill

A landform with a circular base and sloping sides that converge to a point at the top, resembling the shape of a cone.

Fresh Ash Layers

Recent deposits of volcanic ash, consisting of fine particles of volcanic glass, created during volcanic eruptions.