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World is an outfit that sells video games. Demand occurs at a constant
Annual rate of 25,000. The cost of one copy of the video game is $25. Inventory holding costs are calculated at a 15% annual rate. Production set-up costs are $200 per set-up. The annual production rate is 60,000 copies. Assume there are 300 working days per year, and a lead-time of 10 days.
Using production lot-size model, determine:
The optimum production lot-size
The number of production runs per year
The length of a production run
The cycle time
The maximum Inventory level
The reorder point
The total annual cost.
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