Operations Research and Operations Management · Production Control · 2 marks · Numerical answer
A factory produces200 components/day for300 days/year. Demand is15000/year, setup cost₹200/run and holding cost₹2 per unit-year. Find economic production quantity.
Annual production capacity p=200×300=60000, with demand d=15000. EPQ=√[2dS/{h(1−d/p)}]=√[2(15000)(200)/{2(0.75)}]=√4000000=2000 units. Finite production permits consumption while a batch is being made.
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