Non-Slip Tile Company (NST) has been using production runs of 100,000 tiles, 10 times per year, to meet the demand of 1,000,000 tiles annually. The setup cost is $5,200 per run, and holding cost is estimated at 10% of the manufacturing cost of $1 per tile. The production capacity of the machine is 544,000 tiles per month. The factory is open 365 days per year. (a) What production schedule do you recommend? (Round your order size to the nearest whole number and the number of times per year to order to two decimal places.) The recommended policy is to produce tiles at time, times per year. (b) How much is NST losing annually (in $) with its present production schedule? (Use cost of current production schedule - cost of recommended production schedule. Round your answer to two decimal places.) (c) What is the maximum number of tiles in inventory under the current policy? (Round your answer to the nearest whole number.) What is the maximum number of tiles in inventory under the optimal policy? (Round your answer to the nearest whole number.) (d) What proportion of time is the machine idle (not producing tiles) under the current policy? (Round your answer to four decimal places.) What proportion of time is the machine idle (not producing tiles) under the optimal policy? (Round your answer to four decimal places.)
Non-Slip Tile Company (NST) has been using production runs of 100,000 tiles, 10 times per year, to meet the demand of 1,000,000 tiles annually. The setup cost is $5,200 per run, and holding cost is estimated at 10% of the manufacturing cost of $1 per tile. The production capacity of the machine is 544,000 tiles per month. The factory is open 365 days per year. (a) What production schedule do you recommend? (Round your order size to the nearest whole number and the number of times per year to order to two decimal places.) The recommended policy is to produce tiles at time, times per year. (b) How much is NST losing annually (in $) with its present production schedule? (Use cost of current production schedule - cost of recommended production schedule. Round your answer to two decimal places.) (c) What is the maximum number of tiles in inventory under the current policy? (Round your answer to the nearest whole number.) What is the maximum number of tiles in inventory under the optimal policy? (Round your answer to the nearest whole number.) (d) What proportion of time is the machine idle (not producing tiles) under the current policy? (Round your answer to four decimal places.) What proportion of time is the machine idle (not producing tiles) under the optimal policy? (Round your answer to four decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
K16.
Transcribed Image Text:Non-Slip Tile Company (NST) has been using production runs of 100,000 tiles, 10 times per year, to meet the demand of 1,000,000 tiles annually. The setup cost is
$5,200 per run, and holding cost is estimated at 10% of the manufacturing cost of $1 per tile. The production capacity of the machine is 544,000 tiles per month. The
factory is open 365 days per year.
(a) What production schedule do you recommend? (Round your order size to the nearest whole number and the number of times per year to order to two decimal
places.)
The recommended policy is to produce
tiles at time,
times per year.
(b) How much is NST losing annually (in $) with its present production schedule? (Use
cost of current production schedule - cost of recommended production schedule. Round your answer to two decimal places.)
(c) What is the maximum number of tiles in inventory under the current policy? (Round your answer to the nearest whole number.)
What is the maximum number of tiles in inventory under the optimal policy? (Round your answer to the nearest whole number.)
(d) What proportion of time is the machine idle (not producing tiles) under the current policy? (Round your answer to four decimal places.)
What proportion of time is the machine idle (not producing tiles) under the optimal policy? (Round your answer to four decimal places.)
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