The ARC Company produces a compound that is used in pharmaceuticals. The compound can be produced at a rate of 12,000 pounds per day. Annual demand for the compound is0.7

million pounds per year. The fixed cost of setting up for a production run of the compound is $1,500, and the variable cost of production is $3.25 per pound. The company uses an interest rate of 20 percent to account for the cost of capital, and the costs of storage and handling of the compound amount to 12 percent of the value. Assume that there are 250working days in a year