Martinez Evans
05/04/2023 · Middle School
3.1. Outline the four main uses of inventory. 2 marks 3.2. A plant manager of a chemical plant must determine the lot size for a particular chemical that has a steady demand of 30 barrels per day. The production rate is 190 barrel per day, and annual demand is 10,500 barrels, setup cost is \( \$ 200 \), annual holding cost is \( \$ 0.21 \) per barrel and the plant operates 350 days per year. Calculate for the following. 3.2.1.Length of Time Needed to Deplete Maximum On-Hand Inventory 3.2.2. Total annual cost with optimal production unit 3.2.3.The cycle length, for the optimal production unit 3.2.4.The production time per lot 8 marks
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### 3.1 Main Uses of Inventory
1. Raw Materials
2. Work in Progress
3. Finished Goods
4. Maintenance and Repair
### 3.2 Inventory Calculation for Chemical Plant
#### 3.2.1 Length of Time to Deplete Maximum On-Hand Inventory: 7 days
#### 3.2.2 Total Annual Cost with Optimal Production Unit: $5,938.75
#### 3.2.3 Cycle Length for Optimal Production Unit: 35 days
#### 3.2.4 Production Time per Lot: 5.53 days
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