Answered

Assume that our firm produces type C fire extinguishers. We make 130,000 of these fire extinguishers per year. Each extinguisher requires one handle (assume a 300 day work year for daily usage rate purposes). Assume an annual carrying cost of $1.50 per handle; production setup cost of $150, and a daily production rate of 3,500. What is the optimal production order quantity? Show your solutions.​

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Agtarap39viz

[tex]\huge\underline\bold{\boxed{ANSWER:}}[/tex]

  • Q p = 3000 units

[tex]\huge\underline\bold{\boxed{SOLUTION:}}[/tex]

  • In order to calculate optimal production quantity of any order, we need to have the following data with us;

  • Demand of the product
  • What is the ordering cost of product
  • The holding cost of the product
  • Daily usage rate of product
  • Daily production rate of that product.

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