Final answer:
The optimal number of desks the company should produce per production run can be realized by minimizing production and storage costs. This involves calculating the total cost for various production sizes using the fixed and variable costs provided. Unfortunately, without additional details such as demand rate, setup cost, or holding cost, the Economic Order Quantity (EOQ) cannot be computed with the given information.
Step-by-step explanation:
To determine the optimal number of desks a company should produce each production run, we need to balance the fixed costs of production with the storage costs for unsold desks. Since we have a yearly demand of 10,125 desks, the cost for each production run is $500 (fixed cost) plus $15 per desk produced. Storage cost is $8 per desk per year.
The goal is to find the production run size that minimizes the sum of production and storage costs. This involves calculating the total cost for different production run sizes and comparing the costs. Since we don't have a constraint on the production run size or the frequency of the runs, we assume that the goal is to make exactly enough desks to meet annual demand without producing excess inventory or needing multiple runs to satisfy demand.
We can approach this through calculating the Economic Order Quantity (EOQ), which is a common inventory management strategy used to determine the optimal order quantity that minimizes the sum of ordering costs (similar to fixed costs here) and holding costs (similar to storage costs here). However, without a demand rate, setup cost per order, or holding cost per unit per time period, we cannot compute the EOQ directly from the given information.