Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Emarpy Appliance is a company that produces all kinds of major appliances. Bud Banis, the president of Emarpy, is concerned about the production policy for

Emarpy Appliance is a company that produces all kinds of major appliances. Bud Banis, the president of Emarpy, is concerned about the production policy for the company's best-selling refrigerator. The annual demand for this has been about 8500 units each year, and this demand has been constant throughout the year. The production capacity is 210 units per day. Each time production starts, it costs the company $130 to move materials into place, reset the assembly line, and clean the equipment. The holding cost of a refrigerator is $51 per year. The current production plan calls for 420 refrigerators to be produced in each production run. Assume there are 250 working days per year. f) If Bud Banis wants to minimize the total annual inventory cost, how many refrigerators should be produced in each production run?
How much would this save the company in inventory costs compared to the current policy of producing units in each production run?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Hotel Revenue Management

Authors: Dave Roberts

1st Edition

1637421915, 978-1637421918

More Books

Students also viewed these General Management questions

Question

1. Discuss OSHA and how it operates.

Answered: 1 week ago

Question

=+5. For the cost matrix of Exercise 3,

Answered: 1 week ago

Question

What benefit or advantage does your organization offer each public?

Answered: 1 week ago