Engineering Board Exam Reviewer · Engineering Management · hard
A plant produces an item at 200 units/day while demand is 50 units/day (annual demand 10,000). Setup cost is ₱400 and holding cost is ₱5/unit/year. What is the economic production quantity?
- 1265 units
- 1461 units
- 1131 units
- 2530 units
Answer
B. 1461 units
Solution
EPQ = sqrt()[2DS/(H(1 - d/p))] = sqrt()[2(10,000)(400)/(5 × 0.75)] = 1461 units.
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