Suppose that a company needs 1,200,000 items during a year and that preparation for each production run costs $500. Suppose also that it costs $26 to produce each item and $3 per year to store an item. Use the inventory cost model to find the number of items in each production run so that the total costs of production and storage are minimized.
so for far the equation given is based off of
Total production:
(number of run)(cost per Run)+(number of items)(cost per item)/ (1200000/x)(900)+(1200000(13)
Total storage cost:
(avg. number stored)(storage cost per item)=(x/2)(3)
so for far the equation given is based off of
Total production:
(number of run)(cost per Run)+(number of items)(cost per item)/ (1200000/x)(900)+(1200000(13)
Total storage cost:
(avg. number stored)(storage cost per item)=(x/2)(3)