What is the optimal economic production quantity

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Reference no: EM132157578

Andre Greipel is the owner of a small company that produces heart rate monitors. The annual demand is for 2,800 heart rate monitors, and Andre produces these devices in batches. On average, Andre can produce 150 monitors per day during the production process. Demand for monitors has been about 50 monitors per day. The cost to set up the production process is $600, and it costs Andre $0.75 to carry 1 monitor in inventory for one year. How many monitors should Andre produce in each batch? a) What is the optimal economic production quantity? b) On average, how many setups are required per year? c) What is the total cost per year (holding plus setup)?

Reference no: EM132157578

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