Annual Demand (D) = 12000 units
Daily demand (d) = 40 units
Daily Production capacity (p) = 100 units
Holding cost per unit per year (H) = €.10
Setup cost (S) = €50
Optimum size of production run (Q) = ((2*D*S)/(H*(1-(d/p))))^.5
Optimum size of production run (Q) = ((2*12000*50)/(.1*(1-(40/100))))^.5 = 4472.13or 4472 units
Total cost = (D/Q)*S + (Q/2)*H*(1-(d/p))
Total cost = (12000/4472.13)*50 + (4472.13/2)*.1*(1-(40/100))
Total cost = €268.33
*Unit cost of goods are not mentioned.
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