value 0.83 points Problem 13-9 The Friendly Sausage Factory (FSF) can produce ho

Question

value 0.83 points Problem 13-9 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 270 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 297 days a year a. Find the optimal run size. (Do not round intermediate calculations. Round your answer to the nearest whole number.) 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) References eBook & Resources Worksheet Difficulty: 2 Medium Problem 13-9 Learning Objective: 13-09 Describe the economic production quantity model and solve typical problems

Explanation / Answer

A.

Optimal Run Size = (2DS/H)^.5 * (P/(P-U))^.5

D (annual demand) = 270*297

S = $66

H = $.45

P = 5000 per day

U = 270 per day

So,

Optimal Run Size = (2*270*297*66/.45)^.5 * (5000/(5000-270))^.5

Optimal Run Size = 4986.49 units

B.

Number of runs per year = (270*297)/ 4986.49 = 16.08

C.

Length of a run = 4986.49/5000 = .997 or 1 day

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