Greener Pastures Incorporated (GPI) produces a highquality organic lawn food and weed eliminator called SuperGreen (SG). Super Green is sold in 50-pound bags. Monthlydemand for Super Green is 75,000 pounds. Greener Pastures hascapacity to produce 24,000 50-pound bags per year. Th e setup costto produce Super Green is $300. Annual holding cost is estimatedto be $3 per 50-pound bag. Currently, GP is producing in batchesof 2500 bags.(a) Calculate the total annual costs of the current operatingpolicy at GPI.(b) Calculate the economic production quantity (EPQ).(c) Calculate the total annual costs of using the EPQ.(d) Calculate the penalty cost incurred with the presentpolicy.
Greener Pastures Incorporated (GPI) produces a highquality organic lawn food and weed eliminator called SuperGreen (SG). Super Green is sold in 50-pound bags. Monthlydemand for Super Green is 75,000 pounds. Greener Pastures hascapacity to produce 24,000 50-pound bags per year. Th e setup costto produce Super Green is $300. Annual holding cost is estimatedto be $3 per 50-pound bag. Currently, GP is producing in batchesof 2500 bags.(a) Calculate the total annual costs of the current operatingpolicy at GPI.(b) Calculate the economic production quantity (EPQ).(c) Calculate the total annual costs of using the EPQ.(d) Calculate the penalty cost incurred with the presentpolicy.
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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Question
Greener Pastures Incorporated (GPI) produces a highquality organic lawn food and weed eliminator called Super
Green (SG). Super Green is sold in 50-pound bags. Monthly
demand for Super Green is 75,000 pounds. Greener Pastures has
capacity to produce 24,000 50-pound bags per year. Th e setup cost
to produce Super Green is $300. Annual holding cost is estimated
to be $3 per 50-pound bag. Currently, GP is producing in batches
of 2500 bags.
(a) Calculate the total annual costs of the current operating
policy at GPI.
(b) Calculate the economic production quantity (EPQ).
(c) Calculate the total annual costs of using the EPQ.
(d) Calculate the penalty cost incurred with the present
policy.
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