Alyce operates a factory that manufactures pencil boxes which she sells to stationery store. Additional information: Annual demand is 1 million pencil boxes per year Setup cost is $5000 per batch Holding cost is $3 per year for each pencil boxes Maximum production capacity is 2 million pencil boxes per year Currently, pencil boxes are manufactured in 10 batches. 1 a) Find the optimum production quantity that Alyce should produce to minimize her costs. b) Calculate the current annual holding cost and setup cost. c) Draw a diagram showing stock level for the first batch, assume 1 year has 250 working days
Alyce operates a factory that manufactures pencil boxes which she sells to stationery store. Additional information: Annual demand is 1 million pencil boxes per year Setup cost is $5000 per batch Holding cost is $3 per year for each pencil boxes Maximum production capacity is 2 million pencil boxes per year Currently, pencil boxes are manufactured in 10 batches. 1 a) Find the optimum production quantity that Alyce should produce to minimize her costs. b) Calculate the current annual holding cost and setup cost. c) Draw a diagram showing stock level for the first batch, assume 1 year has 250 working days
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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Transcribed Image Text:Alyce operates a factory that manufactures pencil boxes which she sells to stationery store.
Additional information:
Annual demand is 1 million pencil boxes per year
Setup cost is $5000 per batch
Holding cost is $3 per year for each pencil boxes
Maximum production capacity is 2 million pencil boxes per year
Currently, pencil boxes are manufactured in 10 batches.
1 a) Find the optimum production quantity that Alyce should produce to minimize her costs.
b) Calculate the current annual holding cost and setup cost.
c) Draw a diagram showing stock level for the first batch, assume 1 year has 250 working
days
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