A company is about to begin production of a new product. The manager of the department thatwill produce one of the components for the product wants to know how often the machine usedto produce the item will be available for other work. The machine will produce the item at a rateof 200 units a day. Eighty units will be used daily in assembling the final product. Assembly willtake place five days a week, 50 weeks a year. The manager estimates that it will take almost a fullday to get the machine ready for a production run, at a cost of $300. Inventory holding costs willbe $10 a year. a. What run quantity should be used to minimize total annual costs?
A company is about to begin production of a new product. The manager of the department thatwill produce one of the components for the product wants to know how often the machine usedto produce the item will be available for other work. The machine will produce the item at a rateof 200 units a day. Eighty units will be used daily in assembling the final product. Assembly willtake place five days a week, 50 weeks a year. The manager estimates that it will take almost a fullday to get the machine ready for a production run, at a cost of $300. Inventory holding costs willbe $10 a year. a. What run quantity should be used to minimize total annual costs?
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...
Related questions
Question
A company is about to begin production of a new product. The manager of the department that
will produce one of the components for the product wants to know how often the machine used
to produce the item will be available for other work. The machine will produce the item at a rate
of 200 units a day. Eighty units will be used daily in assembling the final product. Assembly will
take place five days a week, 50 weeks a year. The manager estimates that it will take almost a full
day to get the machine ready for a production run, at a cost of $300. Inventory holding costs will
be $10 a year.
a. What run quantity should be used to minimize total annual costs?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Recommended textbooks for you
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.