Real-World Applicationsmedium
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A manufacturing plant has an annual demand of 10,00010,000 units for a component. The setup cost for a production run is \50,andtheannualholdingcostis, and the annual holding cost is $4perunit.AccordingtotheEconomicProductionQuantitymodel,theoptimalbatchsizeisper unit. According to the Economic Production Quantity model, the optimal batch size isQ = \sqrt{\frac{2 D S}{H}},where, where Disannualdemand,is annual demand,Sissetupcost,andis setup cost, andH$ is holding cost. What is the optimal batch size?