Using the Differentiation Method (1st and 2nd Derivative Test), Determine economic lot size for the company and provide an explanation of the results of these calculations. ArialB IUA11EE E E E =3 4T51-6 7 8 9 | 10 I11 12 13 14: | 15 16CHOCODOKIA is a famous chocolate factory in Switzerland. Every year, the company mustproduce 2200 units (with the same amount of production). Sales are evenly distributedthroughout the year. The company wants to determine the lot size which can minimize thecost of ordering (setup costs) and costs of storage (carrying costs). Given that the cost ofproducing each unit is $50, carrying costs are 10% of the average inventory and setup costsare $20 (per production run). Using the Differentiation Method (1st and 2nd Derivative Test),Determine economic lot size for the company and provide an explanation of the results ofthese calculations.El

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ion Method (1st and 2nd Derivative Test), Determine economic lot size for the company and provide an explanation of the results of these calculations.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

Using the Differentiation Method (1st and 2nd Derivative Test), Determine economic lot size for the company and provide an explanation of the results of these calculations.

Arial
B IUA
11
EE E E E =
3 4
T51-6 7 8 9 | 10 I11 12 13 14: | 15 16
CHOCODOKIA is a famous chocolate factory in Switzerland. Every year, the company must
produce 2200 units (with the same amount of production). Sales are evenly distributed
throughout the year. The company wants to determine the lot size which can minimize the
cost of ordering (setup costs) and costs of storage (carrying costs). Given that the cost of
producing each unit is $50, carrying costs are 10% of the average inventory and setup costs
are $20 (per production run). Using the Differentiation Method (1st and 2nd Derivative Test),
Determine economic lot size for the company and provide an explanation of the results of
these calculations.
El

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