Using the data provided in Problem 23, determine whatwill happen if HP uses the economic production quantity modelto establish the quantity produced each cycle.(a) Calculate the economic production quantity (EPQ).(b) Calculate the maximum inventory level using the EPQ.(c) Calculate the total annual cost of using the EPQ.(d) Calculate the penalty cost HP is incurring with its currentpolicy [23. Healthy Plants Ltd. (HP) produces its premium plantfood in 50-pound bags. Demand for the product is 100,000pounds per week. HP operates 50 weeks per year and canproduce 250,000 pounds per week. The setup cost is $200and the annual holding cost rate is $0.55 per bag. Currently,HP produces its premium plant food in batches of 1,000,000pounds.(a) Calculate the maximum inventory level for HP.(b) Calculate the total annual costs of this operating policy]
Using the data provided in Problem 23, determine what
will happen if HP uses the economic production quantity model
to establish the quantity produced each cycle.
(a) Calculate the economic production quantity (EPQ).
(b) Calculate the maximum inventory level using the EPQ.
(c) Calculate the total annual cost of using the EPQ.
(d) Calculate the penalty cost HP is incurring with its current
policy
[23. Healthy Plants Ltd. (HP) produces its premium plant
food in 50-pound bags. Demand for the product is 100,000
pounds per week. HP operates 50 weeks per year and can
produce 250,000 pounds per week. The setup cost is $200
and the annual holding cost rate is $0.55 per bag. Currently,
HP produces its premium plant food in batches of 1,000,000
pounds.
(a) Calculate the maximum inventory level for HP.
(b) Calculate the total annual costs of this operating policy]
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