Merrill Manufacturing Produces Stainless Steel Sinks

Essay

Merrill Manufacturing produces stainless steel sinks. In order to produce the sinks, special equipment must be set up. The setup cost per sink is £10. The cost of carrying sinks in inventory is £1.25 per sink per year. The company produces 50,000 sinks per year.
a.Compute the number of sinks that should be produced per setup in order to minimize the total setup and carrying costs.
b.Compute the total setup and carrying costs associated with the economic order quantity. (Round to the nearest £.)