Final answer:
The economic run size for Annette's Candy Shop is approximately 208 boxes per run, calculated using the Economic Order Quantity formula.
Step-by-step explanation:
The student is asking about the calculation of the economic run size for Annette's Candy Shop's specialty chocolates production. Given the demand, production rate, operating days, setup cost, and holding cost, the economic run size is determined using the Economic Order Quantity (EOQ) formula, which is EOQ = √((2*D*S)/H), where D is the demand, S is the setup cost, and H is the holding cost.To calculate the EOQ for Annette's Candy Shop, the following values are given: Monthly demand (D) is 360 boxes, setup cost (S) is $60, and holding cost (H) is $2 per box per month. Plugging these values into the EOQ formula yields EOQ = √((2*360*60)/2), which simplifies to EOQ = √(43200), yielding an economic run size of 208 boxes approximately.Explanation in more than 100 words: The economic run size indicates the number of chocolate boxes Annette's Candy Shop should produce in each batch to minimize the sum of the setup costs and holding costs associated with production. The EOQ model helps to determine the optimal order size that minimizes costs while meeting customer demand.Conclusion: The economic run size for Annette's Candy Shop would be approximately 208 boxes per run. This calculation ensures that the shop minimizes its costs while still being able to meet the monthly demand of 360 boxes.