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A manager must decide which type of machine to buy, A, B, or C. Machine costs are а. Machine Cost $40,000 $30,000 $80,000 A B Product forecast and processing times on the machines are as follows: Product Annual Demand Processing Time per unit (Hour) А В C 1 16,000 3 4 2 2 12,000 4 3 3 6,000 30,000 6. 4 4 1 Assume that only purchasing costs are being considered. Which machine would have the lowest total cost, and how many of that machine would be needed? Machine operates 10 hours a day, 250 days a year.

A manager must decide which type of machine to buy, A, B, or C. Machine costs are а. Machine Cost $40,000 $30,000 $80,000 A B Product forecast and processing times on the machines are as follows: Product Annual Demand Processing Time per unit (Hour) А В C 1 16,000 3 4 2 2 12,000 4 3 3 6,000 30,000 6. 4 4 1 Assume that only purchasing costs are being considered. Which machine would have the lowest total cost, and how many of that machine would be needed? Machine operates 10 hours a day, 250 days a year.

Practical Management Science
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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A manager must decide which type of machine to buy, A, B, or C. Machine costs are а. Machine Cost $40,000 $30,000 $80,000 A В C Product forecast and processing times on the machines are as follows: Product Annual Demand Processing Time per unit (Hour) А В C 16,000 12,000 6,000 30,000 1 3 4 2 2 4 3 3 4 4 1 Assume that only purchasing costs are being considered. Which machine would have the lowest total cost, and how many of that machine would be needed? Machine operates 10 hours a day, 250 days a year. b. A produce distributor uses 800 packing crates a month, which it purchases at a cost of $10 each. The manager has assigned an annual carrying cost of 35 percent of the purchase price per crate. Ordering costs are $28. i. Find the optimal quantity. ii. What is the total annual cost if EOQ is ordered?
Transcribed Image Text:A manager must decide which type of machine to buy, A, B, or C. Machine costs are а. Machine Cost $40,000 $30,000 $80,000 A В C Product forecast and processing times on the machines are as follows: Product Annual Demand Processing Time per unit (Hour) А В C 16,000 12,000 6,000 30,000 1 3 4 2 2 4 3 3 4 4 1 Assume that only purchasing costs are being considered. Which machine would have the lowest total cost, and how many of that machine would be needed? Machine operates 10 hours a day, 250 days a year. b. A produce distributor uses 800 packing crates a month, which it purchases at a cost of $10 each. The manager has assigned an annual carrying cost of 35 percent of the purchase price per crate. Ordering costs are $28. i. Find the optimal quantity. ii. What is the total annual cost if EOQ is ordered?
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