Input Data
Setup cost per batch 200.00$
Cost per pound of fiber 5.00$
Holding cost 20%
Production rate / hour 100.00
Setup time per batch 0.5
Intermediate Calculations
Holding cost per unit (H) 1.00$
Product
Annual
Demand
Optimal
Batch
Size
Days of
Demand
Annual
Setup
Cost
Annual
Holding
Cost
Production
Hours for
Product per
Year
Number of
Products
Fast 30,000 3,464 42 1,732$ 1,732$ 304.3 5
Medium 12,000 2,191 67 1,095$ 1,095$ 122.7 10
Slow 2,400 980 149 490$ 490$ 25.2 35
Total Production Hours =
3631.9
Total Annual Cost = 73,522$
In this problem, we calculate the EOQ for each product type based on the tradeoff between setup cost and holding
cost.The goal is to understand that the relative batch size (in days of demand) is much larger for slower moving
products as compared to fast moving products.