B. Determine the lot size for Company B in the given scenario that would minimize total annual cost by using the economic production lot size model, showing all of your work.
1. Describe the process used to obtain the answer for part B for an audience not familiar with the formula.

C. When you choose to use sources, include all in-text citations and references in APA format.

Note: To reduce unnecessary matches select ignore “small matches <20 words” and “bibliography.”

Company A:

An electronic retail chain wishes to minimize its ordering costs for a particularly popular model

of laptop computer. This retail chain has a line of credit to finance its inventory and the current

holding rate is 4.5%. The chain estimates it can sell 30,000 units per year and it pays $425 dollars

per unit. It costs $36 dollars to place each order. How many units should it order each time?

You should round your answer up to the nearest laptop unit.

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Company B:

A manufacturer of laptop computers operates a plant with an annual capacity of 6,630,000

laptop units. One of its models is expected to sell 390,000 units in the coming year.

How large should each product lot be if it costs $425 to change production from one model to

another. Assume that the manufacturer values each laptop unit at $210 dollars and it has a

holding rate of 5.5%. You should round your answer up to the nearest laptop unit.

Show work below: