What is the economic production quantity in bags

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Reference no: EM131654894

Healthy Plants Ltd. (HP) produces its premium plant food in 100-pound bags. Demand for the product is 100,000 pounds per week. HP operates 50 weeks per year. HP can produce 250,000 pounds per week. The setup cost is $200 and the annual holding cost rate is $0.55 per bag. Currently, HP produces its premium plant food in batches of 1,000,000 pounds.

1. What is the economic production quantity (EPQ) in bags?

2. What is the maximum inventory level in bags using the economic production quantity (EPQ) as the quantity of plant food to make per production cycle?

3. What is the total annual cost of using the economic production quantity (EPQ) as quantity of plant food to make per production cycle?

Reference no: EM131654894

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