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The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $100, holding cost is $24 per unit per year, the daily demand rate is 20 and
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The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $100, holding cost is $24 per unit per year, the daily demand rate is 20 and the daily production rate is 100. What is the production order quantity for this problem

User Ideamotor
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1 Answer

26 votes
26 votes

Answer:

Step-by-step explanation:

Calculation to determine the production order quantity for this problem

Sqrt [ (2*3650*100)/ (24*(1-20/100)) ] = 500

Sqrt [ (2*50000*20)/ (10*(1-20/100)) ] = 500

=√200,000/(10*0.8)

=200,000/8

=250000

User Peter Kozlovsky
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