Problem NO: 2

Given that annual demand for a product is 20,000 units, cost per unit = $6.00, holding cost rate =\n2.5%/month, changeover (setup) time between product

Given that annual demand for a product is 20,000 units, cost per unit = $6.00, holding cost rate =

\r\n

2.5%/month, changeover (setup) time between products averages 2.0 hr, and downtime cost during

\r\n

changeover = $200/hr, determine (a) economic order quantity and (b) total inventory costs for this

\r\n

situation.

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