The monthly holding cost for finished product

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There is a $5200 cost of setting up for a run and the monthly holding cost for a finished product is $2.61. Part of the holding cost is due to a 5% risk each month that the product on hand will become obsolete. The minimum attractive rate of return is considered to be 1.5% monthly; inventory has a value of $38.02/unit and if obsolete $17.00/unit. With a forecast demand of 618/month and a production rate of $1000/month, the total monthly setup and holding cost would be minimized by a lot size most nearly? hint: EOQ model

Reference no: EM131233315

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