Jim's Knives produces knives for certain retail store. His skilled workers can make 10 knives day of their best-selling knife (known as Bowie knife). Their retail store sells average of 5 knives per day. Jim's workers favour to work on only one kind of knife at any given time for efficiency reasons. They have evaluated that changing from one kind of knife to another cost $100. Inventory cost for this knife has been evaluated at $10 per year per knife. Jim's Knives operate both their factory and retail store 250 days year.
a. What batch size for production of Bowie knives would you suggest to Jim?
b. What is the total annual cost of suggestions?
c. How many production runs year does manufacturing plant require to satisfy demand?
d. How long the average batch of Bowie knives will last (in days)?