Solved: SHOW ALL STEPS FOR THE QUESTION TO BE WORTH ANY MARKS. SHOW FORMULAS

A manufacturer of mechanical pumps produces its own water proof electric switches. The switches are used in several of its products. Total annual demand for the switches is 30,000 units based on 300 operating days per year. When additional units are required the company can produce the switch at a rate of 200 units per day. Setup cost per production run is $250, while holding costs are $2 per unit per year (a) What is the optimal number of switches to produce per production run (EPQ)? (5 points) If the company uses the EPQ from part (a) (b) What is the maximum level that inventory for the motor will build up to? (4 points) (c) How long is the inventory cycle and for how much of that time will the company be producing motors? (4 points) (d) What is the total annual cost of inventory control for the motors? (holding cost+ “set-up” costs) (4 points)