A manufacturer of laptop computers operates a plant with an annual capacity of 88,400,00 laptop units. One of its models is expected to sell 5,200,000 units in the coming year. How large should each product lot be if it costs $500 to change production from one model to another. Assume that the manufacturer values each laptop unit at $250 and it has a holding rate of 4%. You should round up to the nearest laptop unit.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.Total annual costs = annual holding cost +annual ordering costTC = 1/2 QCh+D/Q CoQ=number of pieces to orderD=annual demandCh=holding or carrying costCo=ordering cost
