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Quantitative Analysis

Color View is a manufacturer of color monitors for personal computers. The company uses the EOQ model with gradual replenishment to determine the production lot sizes for its various models. Color View's newest monitor is the X-435 model. The company expects sales of this model to run at the rate of 6,000 per year for awhile. The facilities for producing this model are shared with several other models. While these production facilities are devoted to the X-435 model, the production rate is 2,000 monitors per month. The cost each time the facilities are set up for a production run for this model is $7,500. The annual cost of holding each of these monitors in inventory is estimated to be $120. In each period the actual production-run time should last:

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