What is the maximum number of tiles in inventory under the current policy? Under the optimal policy?
Non-Slip Tile Company (NST) has been using production runs of 100,000 tiles, 10 times per year to meet the demand of 1,000,000 tiles annually. The setup cost is $5000 per run, and holding cost is estimated at 10% of the manufacturing cost of $1 per tile. The production capacity of the machine is 500,000 tiles per month. The factory is open 365 days per year.
Current maximum inventory = 83,333
Optimal maximum inventory = 288,675
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Answer the following statement true (T) or false (F)