7. A Spanish company is considering moving manufacturing from Spain to Mexico.3 hours of labor are needed to make the item with Spanish cost of labor 25 Eurosper hour and Mexican 5 per hour. Spanish holding cost per week is 2 Euros andMexican 1.5 Euros. Orders are placed weekly and lead time in Spain is 3 weeks withMexican lead time 15 weeks. Demand is normally distributed with mean 500 andstandard deviation 100 and they use 3 standard deviations as the safety factor.A) If it keeps production in Spain, on average how many units of inventory will ithave on hand and on order?B) If it moves production to Mexico, on average how many units will it have on handand on order?C)ln Spain, what is its holding cost per item?D) In Mexico, what is its holding cost per item?E) What would be the change in cost per item is production is moved from Spain toMexico?

Given data: Average demand per period D = 500 Lead time L = 3 week SD of demand per…

Answered: 7. A Spanish company is considering…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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