Question

Radovilsky Manufacturing​ Company, in​ Hayward, California, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 12 comma 200 flashing lights per year and has the capability of producing 100 per day. Setting up the light production costs ​$51. The cost of each light is ​$0.95. The holding cost is ​$0.05 per light per year. ​a) What is the optimal size of the production​ run? nothing units ​(round your response to the nearest whole​ number).

Answer 1

Answer: Q = 6,440

Step-by-step explanation:

Annual demand = D = 12,200

Setting up cost = O = $51

Production rate per year = P = Operating days × Producing capability

= 300 days a year × 100 per day

= 30,000

Holding cost per year = H = $0.05 per light

`X = (D)/(P)`

`X = (12,200)/(30,000)`

= 0.4

Therefore,

Optimal size of the production​ run, Q

`=\sqrt{(2OD)/(H(1-x)) }`

`=\sqrt{(2*51*12,200)/(0.05(1-0.4))}`

`=\sqrt{(1,244,400)/(0.03)}`

`=√(41,480,000)`

= 6,440.49

Q = 6,440