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6) Recall Prince Pots from question 5. Use the following information to answer the ensuing questions. Demand for pots is 26 pots a day. There
6) Recall Prince Pots from question 5. Use the following information to answer the ensuing questions. | |
Demand for pots is 26 pots a day. | |
There are 260 working days in a year. | |
It costs $65 to carry a pot in the warehouse over an entire year. | |
Each order for pots cost $72. | |
(a) Prince Pots is tooling around with a different idea of running a production facility to provide sheet metal for the pots. There are associated costs with running a production facility. Prince can produce 200 or less sheets of metal for $7 a piece. He can produce between 201 and 500 for $6 a sheet, and over 500 for $5 a sheet. How many sheets should Prince ask the production facility to produce in any given order? Interpret the costs for this EOQ. | |
(b) Prince has found that the production facility can produce 35 sheets of metal a day. Assuming the demands given before part (a), how does the EOQ change from what is found in #5? Why did the EOQ change (in your own words)? (Part (a) has nothing to do with this question) |
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