(EPR) The Town and Country Nursery grows and sells a tremendous variety of household and outdoor plants. The firm also grows and sells garden vegetables. One of the more popular vegetables grown by the firm is a red onion. The company sells approximately 30,000 pounds of red onions per year. Two of the major inputs in the growing of onions are seeds and fertilizer. Due to the poor germination rate, 2 seeds must be purchased for each onion plant grown (a mature onion plant provides .5 pound of onion). Also, .25 pounds of fertilizer are required for each pound of onion produced. The following information sum¬ marizes costs pertaining to onions, seeds, and fertilizer. Carrying costs for onions are expressed per pound of onion; canying costs for seeds are expressed per seed; and for fertilizer, carrying costs are expressed per pound of fertilizer. To plant onions, the company incurs a cost of $50 to set up the planter and the fertilizing equipment.

a. What is the economic production run for onions?

b. How many production runs will Town and Country make for onions annually?

c. What are the economic order quantities for seeds and fertilizer?

d. How many orders will be placed for seeds? For fertilizer?

e. What is the total annual cost of ordering, carrying, and setting up for onion production?

f. How is the planting of onions similar to and different from a typical factory production run?
g. Are there any inconsistencies in your answers to parts a through c that need to be addressed? Explain.

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Carrying cost Ordering cost Setup cost ONIONS $ .25 - $50.00 SEEDS $ .01 $4.25 FERTILIZER $ .05 $8.80