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 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.

Find the optimal run size. (Do not round intermediate calculations. Round your answer to the nearest whole number.)

Find the number of runs per year. (Round your answer to the nearest whole number.)

Find the length (in days) of a run. (Round your answer to the nearest whole number.)

A mail-order house uses 17,560 boxes a year. Carrying costs are 60 cents per box a year, and ordering costs are $96. The following price schedule applies.

Determine the optimal order quantity. (Round your answer to the nearest whole number.)

Determine the number of orders per year. (Round your answer to 2 decimal places.)

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.

Explanation / Answer

a.Calculation of optimal run size"

Production = 5000 hot dogs

Demand= 270/day x 297 days/yr. = 80190 hotdogs/yr

Factory operates = 297 days per year   

            Setup cost = $66

Holding cost = $.45/hotdog per yr.

            a. (2*Demand *Setup cost / holding cost)^1/2 = (2*80190*66/0.45)^1/2= 4849.99 or 4850

          b. 80190/4850 = 16.53, or about 17 runs/yr.

            c.   run length = 4,850/5,000 = .97 days, or approximately 1 day

a, Calculation of optimal order quantity:

( 2*ordering cost per unit*annual demand / carrying cost per unit per year)^1/2

=( 2*60*17560/$1.10*0.60)^1/2

= 2260

b. Number of orders per year = 17560/2260= 8 orders per year

Production = 5000 hot dogs

Demand= 270/day x 297 days/yr. = 80190 hotdogs/yr

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.