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Problem 4: 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 set-up cost is $5,000 per run and holding cost is estimated at 10% of the manufacturing cost of $1 per tile. The production capacity of the machine is 500,000 tiles per month. a. Rewrite the inputs using standard notations (D, P, ...) b. Calculate the optimal production lot size. c. How much is NST losing annually with their current production schedule, comparing with the optimal production lot size?

Problem 4: 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 set-up cost is $5,000 per run and holding cost is estimated at 10% of the manufacturing cost of $1 per tile. The production capacity of the machine is 500,000 tiles per month. a. Rewrite the inputs using standard notations (D, P, ...) b. Calculate the optimal production lot size. c. How much is NST losing annually with their current production schedule, comparing with the optimal production lot size?

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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Problem 4: 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 set-up cost is $5,000 per run and holding cost is estimated at 10% of the manufacturing cost of $1 per tile. The production capacity of the machine is 500,000 tiles per month. a. Rewrite the inputs using standard notations (D, P, ...) b. Calculate the optimal production lot size. c. How much is NST losing annually with their current production schedule, comparing with the optimal production lot size?
Transcribed Image Text:Problem 4: 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 set-up cost is $5,000 per run and holding cost is estimated at 10% of the manufacturing cost of $1 per tile. The production capacity of the machine is 500,000 tiles per month. a. Rewrite the inputs using standard notations (D, P, ...) b. Calculate the optimal production lot size. c. How much is NST losing annually with their current production schedule, comparing with the optimal production lot size?
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