Question

A shop that makes candles offers a blueberry scented candle which has daily demand of 10 boxes. Blueberry candles can be produced at a rate of 36 boxes per day. The shop operates 365 days a year. Setup cost is $60 for blueberry candles, regardless of how many boxes of blueberry candles are produced, and holding cost is $24 per box per year. Assuming the shop is minimizing its costs, which of the following is closest to the maximum number of blueberry candles the shop will ever have in inventory? A. 98 boxesB. 135 boxesC. 7 boxesD. 159 boxesE. 115 boxes

Answer 1

E. 115 boxes.

Step-by-step explanation:

d: 10 boxes/day

p: 36 boxes/day

n: 365 days

s: $60

H: $24 box/year

D: d*n

D= 10*365= 3650 boxes/year

EPQ =
`√(2DS/H) *√(p/p-d)`

EPQ=
`√(2*365*60/24) *√(36/36-10)`

EPQ= 158.96 = 159 units

I=Q/P * (p-d)

I=159/36 * (36-10)

I=114.83

115 boxes aproximately