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Tyler decides to use the Production Lot Model to estimate the amount of candy he should prepare in advance for selling at his bakery. The sugar candy he creates can last for a long time with proper packaging and is fairly easy to store in inventory if required. He runs some calculations based upon the market demand and his production capacity as follows: The Production Capacity for sugar candies is 12 Ibs. per month • Monthly Demand is estimated at 10 Ibs. per month with the demand rate expected to be constant through the year • Cost of setting up the production line (sugar, flavoring, heating equipment, etc.) is expected to be around $10 for raw materials and distribution of work with a lead time of 4 days. • The manufacturing cost per pound of candy is $5.00, which includes wages, electricity costs, and costs of raw materials. • The annual holding cost is figured at a 20% rate, which is pretty standard in this business • The number of working days per year are 300 Fill in the following table based on this information: # Optimal Inventory Policy 1 Production Lot Size Q" Answer Type Ibs. 2 Annual Inventory Holding Cost H dollars 3 Annual Setup Cost O dollars

Tyler decides to use the Production Lot Model to estimate the amount of candy he should prepare in advance for selling at his bakery. The sugar candy he creates can last for a long time with proper packaging and is fairly easy to store in inventory if required. He runs some calculations based upon the market demand and his production capacity as follows: The Production Capacity for sugar candies is 12 Ibs. per month • Monthly Demand is estimated at 10 Ibs. per month with the demand rate expected to be constant through the year • Cost of setting up the production line (sugar, flavoring, heating equipment, etc.) is expected to be around $10 for raw materials and distribution of work with a lead time of 4 days. • The manufacturing cost per pound of candy is $5.00, which includes wages, electricity costs, and costs of raw materials. • The annual holding cost is figured at a 20% rate, which is pretty standard in this business • The number of working days per year are 300 Fill in the following table based on this information: # Optimal Inventory Policy 1 Production Lot Size Q" Answer Type Ibs. 2 Annual Inventory Holding Cost H dollars 3 Annual Setup Cost O dollars

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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Tyler decides to use the Production Lot Model to estimate the amount of candy he should prepare in advance for selling at his bakery. The sugar candy he creates can last for a long time with proper packaging and is fairly easy to store in inventory if required. He runs some calculations based upon the market demand and his production capacity as follows: • The Production Capacity for sugar candies is 12 Ibs. per month • Monthly Demand is estimated at 10 Ibs. per month with the demand rate expected to be constant through the year • Cost of setting up the production line (sugar, flavoring, heating equipment, etc.) is expected to be around $10 for raw materials and distribution of work with a lead time of 4 days. • The manufacturing cost per pound of candy is $5.00, which includes wages, electricity costs, and costs of raw materials. • The annual holding cost is figured at a 20% rate, which is pretty standard in this business • The number of working days per year are 300 Fill in the following table based on this information: # Optimal Inventory Policy 1 Production Lot Size Q Answer Type Ibs. Annual Inventory Holding Cost H dollars 3 Annual Setup Cost O dollars
Transcribed Image Text:Tyler decides to use the Production Lot Model to estimate the amount of candy he should prepare in advance for selling at his bakery. The sugar candy he creates can last for a long time with proper packaging and is fairly easy to store in inventory if required. He runs some calculations based upon the market demand and his production capacity as follows: • The Production Capacity for sugar candies is 12 Ibs. per month • Monthly Demand is estimated at 10 Ibs. per month with the demand rate expected to be constant through the year • Cost of setting up the production line (sugar, flavoring, heating equipment, etc.) is expected to be around $10 for raw materials and distribution of work with a lead time of 4 days. • The manufacturing cost per pound of candy is $5.00, which includes wages, electricity costs, and costs of raw materials. • The annual holding cost is figured at a 20% rate, which is pretty standard in this business • The number of working days per year are 300 Fill in the following table based on this information: # Optimal Inventory Policy 1 Production Lot Size Q Answer Type Ibs. Annual Inventory Holding Cost H dollars 3 Annual Setup Cost O dollars
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