The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per d
ID: 453442 • Letter: T
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 250 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 292 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
Production rate = 5000/day
Demand rate = 250 / day
D = Annual Demand = Daily demand rate*No. of days = 250*292 = 73000
Setup cost = $ 66
Holding cost = 45 cents = $ .45
Optimal quantity= [(2 × D× S)/ H] * (p/(p-d)) = ((2*73000*66)/.45) * (5000/(5000-250)
= 1463.329537 * 1.025978352 = 1502.
Number of Production Runs per year = Annual Demand/Production run size = 5000/1502
No. of production runs per year = 3.32, rounding off 4.
Production run length = Optimal Quantity / production rate
= 1502/5000 = 0.3 days. (if rounded off 1 day.)
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