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Question: A Company has a monthly demand of 800 units of a product. The company can produce 8 products per hour when it starts a production run. It costs Rs. 3000 for shop set-up to start a production run. The inventory carrying cost amounts to Rs. 1.50 per unit per month. What is the optimal batch size? Assume 25 working day in a month and eight working hours in a day. How frequently should the production run be undertaken and what should be the length of each run?
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