Question

Dan Bumblauskas is the owner of a small Iowa company that produces electric knives used to cut fabric. The annual demand is for 10 comma 500 ​knives, and Dan produces the knives in batches. On​ average, Dan can produce 190 knives per​ day; during the production​ process, demand has been about 70 knives per day. The cost to set up the production process is ​$85​, and it costs Dan ​$1.10 to carry a knife for 1 year. How many knives should Dan produce in each​ batch?

Answer 1

Dan should produce approximately 1,219 knives in each batch.

Step-by-step explanation:

To determine how many knives Dan should produce in each batch, we need to calculate the Economic Order Quantity (EOQ). The EOQ formula is:

Plugging in the numbers, we get:

EOQ = √((2 * 10,500 * 190) / 1.10) ≈ 1,219

Therefore, Dan should produce approximately 1,219 knives in each batch.