Union machine corporation operates a punch press that produces 20 units of product M each hour. The press is in operation five hours a day. In order to set up the press for product M, it is necessary to shut down for tow hours. Setup time costs the company $15 per hours.
The demand for product M is 40 units a day, during 250 operating days in a year. The inventory carrying cost, for each unit of product M, is $1 per year.