The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,250 per d
ID: 357227 • Letter: T
Question
The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,250 per day. FSF supplies hot dogs to local restaurants at a steady rate of 380 per day. The cost to prepare the equipment for producing hot dogs is $67. Annual holding costs are 49 cents per hot dog. The factory operates 289 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
Given are following data :
Annual demand of hot dogs = D = 380 / day x 289 days = 109820
Daily demand of hot dogs = d = 380
Daily production rate of hot dogs = p = 5250
Equipment set up ( i.e. preparation ) cost = Co = $67
Annual unit holding cost = Ch = $ 0.49
= Square root ( 2 x Co x D / Ch x ( 1 – d/p) )
= square root ( 2 x 67 x 109820 / 0.49 x ( 1 – 380/5250) )
= square root ( 2 x 67 x 109820 / 0.49 x 0.9276)
= 5690.03 ( 5690 rounded to nearest whole number )
OPTIMUM RUN SIZE= 5690 HOT DOGS
LENGTH OF RUN = 1 DAY
OPTIMUM RUN SIZE= 5690 HOT DOGS
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