An Introduction to Management Science 13th Edition by David Anderson,Dennis Sweeney ,Thomas Williams ,Jeffrey Camm, Kipp Martin

Exercise 35

Assume that you are reviewing the production lot size decision associated with a production operation where P = 8000 units per year, D = 2000 units per year. C o = $300, and C h = $1.60 per unit per year. Also assume that current practice calls for production runs of 500 units every three months. Would you recommend changing the current production lot size? Why or why not? How much could be saved by converting to your production lot size recommendation?