The Wod Chemical Company produces a chemical compound that is used as a lawnfertilizer. The compound can be produced at a rate of 10,000 pounds per day. Annualdemand for the compound is 0.6 million pounds per year. The fixed cost of settingup for a production run of the chemical is $1,500, and the variable cost of production is $3.50 per pound. The company uses an interest rate of 22 percent to accountfor the cost of capital, and the costs of storage and handling of the chemical amountto 12 percent of the value. Assume that there are 250 working days in a year.b. What proportion of each production cycle consists of uptime and what proportionconsists of downtime?
The Wod Chemical Company produces a chemical compound that is used as a lawnfertilizer. The compound can be produced at a rate of 10,000 pounds per day. Annualdemand for the compound is 0.6 million pounds per year. The fixed cost of settingup for a production run of the chemical is $1,500, and the variable cost of production is $3.50 per pound. The company uses an interest rate of 22 percent to accountfor the cost of capital, and the costs of storage and handling of the chemical amountto 12 percent of the value. Assume that there are 250 working days in a year.b. What proportion of each production cycle consists of uptime and what proportionconsists of downtime?
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 Wod Chemical Company produces a chemical compound that is used as a lawn
fertilizer. The compound can be produced at a rate of 10,000 pounds per day. Annual
demand for the compound is 0.6 million pounds per year. The fixed cost of setting
up for a production run of the chemical is $1,500, and the variable cost of production is $3.50 per pound. The company uses an interest rate of 22 percent to account
for the cost of capital, and the costs of storage and handling of the chemical amount
to 12 percent of the value. Assume that there are 250 working days in a year.
b. What proportion of each production cycle consists of uptime and what proportion
consists of downtime?
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