The Ambrosia Bakery makes cakes for freezing and subsequent sale. The bakery, which operates five days a week,52 weeks a year, can produce cakes at the rate of 116 cakesper day. The bakery sets up the cake-production operationand produces until a predetermined number (Q) have beenproduced. When not producing cakes, the bakery uses itspersonnel and facilities for producing other bakery items.The setup cost for a production run of cakes is $700. Thecost of holding frozen cakes in storage is $9 per cake peryear. The annual demand for frozen cakes, which is constant over time, is 6000 cakes. Determine the following:a. Optimal production run quantity (Q)b. Total annual inventory costsc. Optimal number of production runs per yeard. Optimal cycle time (time between run starts)e. Run length in 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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The Ambrosia Bakery makes cakes for freezing and subsequent sale. The bakery, which operates five days a week,
52 weeks a year, can produce cakes at the rate of 116 cakes
per day. The bakery sets up the cake-production operation
and produces until a predetermined number (Q) have been
produced. When not producing cakes, the bakery uses its
personnel and facilities for producing other bakery items.
The setup cost for a production run of cakes is $700. The
cost of holding frozen cakes in storage is $9 per cake per
year. The annual demand for frozen cakes, which is constant over time, is 6000 cakes. Determine the following:
a. Optimal production run quantity (Q)
b. Total annual inventory costs
c. Optimal number of production runs per year
d. Optimal cycle time (time between run starts)
e. Run length in working days

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