## [answered] A small shop makes candles. Monthly demand is 360 boxes. Ra

• A small shop makes candles. Monthly demand is 360 boxes. Raw materials can be produced (supplied) at a rate of 36 boxes per day. Daily usage rate is 18 boxes per day. Assume that demand is uniform throughout the month. Setup cost is \$60 for a run (order), and holding cost is \$2 per box per month.

Hint 1: Setup cost should be treated as ordering cost.
Hint 2: Larger time unit is the month and smaller time unit is the day.

a) What is the economic order quantity?

b) What is the maximum inventory level?

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This question was answered on: Sep 18, 2020

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