The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per d

Question

The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per day. FSF supplies hot dogs to local restaurants at a steady rate of 260 per day. The cost to prepare the equipment for producing hot dogs is $66. Annual holding costs are 45 cents per hot dog. The factory operates 295 days a year. a. Find the optimal run size. (Do not round intermediate calculations. Round your answer to the nearest whole number.) Optimal run size b. Find the number of runs per year. (Round your answer to the nearest whole number.) Number of runs c. Find the length (in days) of a run. (Round your answer to the nearest whole number.) Run length (in days)

Explanation / Answer

Daily demand, D = 260 per day

Setup cost,S = $66

Annual Holding cost = $ 0.45 per unit

Daily Holding cost, IC = $ 0.45/290 per unit

Optimal run size, Q = Sqrt(2DS/IC) = 4703 unit per day

b) Number of run per year = Q*290 = 4703*290 = 1363843 unit per year

c) Length of a run = 5000/4703 = 1.06 days = 1 days

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