The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $50, holding cost is $12 per unit per year, the daily demand rate is 10 and the daily production rate is 100. What is the number of production runs for this problem?

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aristeus aristeus · Answer 1 · 2019-12-04T11:21:35+01:00

Answer:

Number of production runs will be 184

Explanation:

We have given setup cost K = $50

Demand = 3650 units

Holding cost h = $12 per unit per year

Daily demand rate = 10

And daily production rate = 100

So [tex]x=\frac{10}{100}=0.1[/tex]

We know that production order quantity is given as\

[tex]=\sqrt{\frac{2KD}{h}\times (1-x)}=\sqrt{\frac{2\times 50\times 3650}{12}\times (1-0.1)}=184[/tex]

So the number of production runs will be 184