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Background: Wes and Steve are partners in a lunch truck company that operates a central kitchen and operates lunch trucks that travel to various
Background: Wes and Steve are partners in a lunch truck company that operates a central kitchen and operates lunch trucks that travel to various locations in Philadelphia, Monday-Friday. The lunch trucks deliver pre-packaged healthy sandwich and salad alternatives, fresh fruit and pre-packaged low-fat desserts and canned beverages. Together, the partners have to make many decisions about how to structure the operational aspects of the business so that it is cost effective, efficient and profitable. Information: Wes and Steve make homemade hot sauce for use in their food manufacturing process. The sauce, which is NOT perishable, is used at a steady rate of 240 bottles/month. The sauce can be produced at a rate of 50 bottles/day. Assume that the kitchen (where the sauce is used) operates 320 days a year. Setup costs are $35 for a run of sauce, and holding costs are $1.50 per bottle. Set up time for each production run of hot sauce is 1 day. NOTE: You must calculate D and u for this problem. Use data provided to calculate D first. Then use D and # days info to calculate u. ***This is similar to what we discussed in class.***
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