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    Maximum Inventory Level

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    Peter is a production manager for a manufacturing firm that produces staplers. The annual demand for the stapler is 1,600 units. The holding cost is $2 per unit, per year.

    The cost of setting up the production line for this is $25. There are a total of 200 working days per year. The production rate for this product is 80 per day. If Peter decides to produce 200 units each time he started production of the stapler, what would be his maximum inventory level?

    a. 200
    b. 180
    c. 100
    d. 90
    e. none of the above

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    Solution Summary

    The solution is comprised of a brief step by step calculation of determining maximum inventory levels.