7. A steel rolling mill can produce I-beams at the rate of 20 tons per week. Customer demand for the beams is 5 tons per week. To produce I-beams, the mill must go through a setup that requires changing to the appropriate rolling patterns. Each setup costs the mill $10,000 in labor and lost produc- tion. I-beams cost the mill $2,000 per ton and the mill has a holding cost of 25 percent. What is the optimal production batch size for I-beams? What is the annual setup cost of the optimal policy? What is the annual holding cost? E
7. A steel rolling mill can produce I-beams at the rate of 20 tons per week. Customer demand for the beams is 5 tons per week. To produce I-beams, the mill must go through a setup that requires changing to the appropriate rolling patterns. Each setup costs the mill $10,000 in labor and lost produc- tion. I-beams cost the mill $2,000 per ton and the mill has a holding cost of 25 percent. What is the optimal production batch size for I-beams? What is the annual setup cost of the optimal policy? What is the annual holding cost? E
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter8: Tactical Decision-making And Relevant Analysis
Section: Chapter Questions
Problem 54P
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