The annual demand of the product of a food production company is 2400 tons, and this...
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The annual demand of the product of a food production company is 2400 tons, and this demand can be considered constant (evenly spread during the year) and deterministic. The setup cost of the production line is 7200 THUF. The production rate of the line is 4000 tons per year. The unit production cost is 2000 THUF per ton. The annual inventory holding rate is 12 percent. Assume 360 active working days for a year. a) Calculate the optimal production quantity, assuming that finished products are continuously delivered in the warehouse! b) How much must be the inventory level at the placement of an order, assuming that the time passing between the placement of the order and the arrival of the first products (lead time) is 1 month? c) How much is the total cost of the optimal order policy? d) The current production policy of the company is to produce all the demanded yearly quantity in one production lot. This large quantity is stored in the warehouse and the inventory level decreases gradually during the whole year with the demand rate. How much is the decrease of the total cost if the optimal order policy is applied? How much should be the production cost, in order to get an optimal order policy described in task d)? The annual demand of the product of a food production company is 2400 tons, and this demand can be considered constant (evenly spread during the year) and deterministic. The setup cost of the production line is 7200 THUF. The production rate of the line is 4000 tons per year. The unit production cost is 2000 THUF per ton. The annual inventory holding rate is 12 percent. Assume 360 active working days for a year. a) Calculate the optimal production quantity, assuming that finished products are continuously delivered in the warehouse! b) How much must be the inventory level at the placement of an order, assuming that the time passing between the placement of the order and the arrival of the first products (lead time) is 1 month? c) How much is the total cost of the optimal order policy? d) The current production policy of the company is to produce all the demanded yearly quantity in one production lot. This large quantity is stored in the warehouse and the inventory level decreases gradually during the whole year with the demand rate. How much is the decrease of the total cost if the optimal order policy is applied? How much should be the production cost, in order to get an optimal order policy described in task d)?
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Entrepreneurial Finance
ISBN: 978-1305968356
6th edition
Authors: J. Chris Leach, Ronald W. Melicher
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