Question

Daily production capacity of a bearing manufacturing company is 30000 bearings. The daily demand of the bearing is 15000, The holding cost per year of keeping a bearing in the inventory is Rs. 20. The setup cost for the production of a batch is Rs. 1800. Assuming 300 working days in a year, the economic batch quantity in the number of bearings is (in integer).

• A. 40250

Answer 1

The correct option is A 40250
$Q^{\ast }=\sqrt{\frac{2D\times C_0}{C_h}\times \frac{P}{P-d}}$

$=\sqrt{\frac{2\times 15000\times 300\times 1800}{20}\times \left(\frac{30000}{30000-15000}\right)}$

$=40249.2\simeq 40250\text{units}$