solution
Hi-Pad Auto Parts manufactures brake shoes for supply to various automotive manufacturers. The firm operates its production facility 300 days per year. It has orders for about 12,000 brake shoes per year and has the capability of producing 100 per day. Setting up the brake shoes production costs $55. The cost of each brake shoe is $1. The holding cost is $0.10 per brake shoe per year
. a) What is the optimal size of the production run (EPQ)?
b) What is the average holding cost per year?
c) What is the average setup cost per year?
d) What is the total cost per year, including the cost of the brake shoe?