Question
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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