A production order quantity problem has a daily demand rate = 10 and a daily production rate = 50.

The production order quantity for this problem is approximately 750 units.

What is the average inventory for this problem?

A. 600

B. 245

C. 300

D. 375

E. 61

C. 300

Explanation:

Step 1. Given information.

daily demand rate = 10. daily production rate = 50. Q is 750.

Step 2. Formulas needed to solve the exercise.

maximum inventory = Q (1-d/p)

Step 3. Calculation.

612 x (1-10/50) = 600

Step 4. Solution.

average inventory = max/2 = 300