EL Computer produces its multimedia notebook computer on a production line that has anannual capacity of 16,000 units. EL Computer estimates the annual demand for this model a6000 units. The cost to set up the production line is $2345, and the annual holding cost is $30per unit. Current practice calls for production runs of 500 notebook computers each montha. What is the optimal production lot size?b. How many production runs should be made each year? What is the recommended cycletime?c. Would you recommend changing the current production lot size policy from themonthly 500-unit production runs? Why or why not? What is the projected savings ofyour recommendation?

A. The optimum production lot size can be decided through the usage of the Economic Order Quantity…

Answered: EL Computer produces its multimedia…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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