Scenario C.1 Jerry Allison Is in Charge of Production for a Small

Multiple Choice

Scenario C.1
Jerry Allison is in charge of production for a small producer of plumbing supplies. The cricket model has an estimated annual demand of 12,000 units and can be produced at a production rate of 90 units per day. The company produces (and sells) the cricket 300 days per year. Setup cost to produce this model averages $22 and the item has a holding cost of $3 per unit per year.
-Use the information in Scenario C.1. If Jerry chooses to produce the batch size suggested by the economic production lot size (ELS) model, what is the annual cost?

A) less than or equal to $900
B) greater than $900 but less than or equal to $950
C) greater than $950 but less than or equal to $1,000
D) greater than $1,000