Nursery manufactures its own natural organic fertilizer that it sells mostly to gardeners and homeowners. Annual demand for fertilizer is 270,000 pounds. Company is able to make 305,000 pounds annually. Cost to transport fertilizer from plant to nursery is $170 per load. Annual carrying cost of fertilizer is $0.12 per pound.
a. find out optimal production size for fertilizer
b. find out maximum inventory level
c. If company can increase production capacity to 360,000 pounds per day, will it decrease total inventory costs? Support answer with essential computations.