# quiz ch 20 - 3.If Liberty Celebrations were to schedule 30...

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Liberty Celebrations, Inc. manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is \$1.60, and the cost to initiate a production run is \$50. There are no flag displays on hand but Liberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous. 1.If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the flag displays for the coming year is 100000/60 = 1667 units per run Average inventory = 1667 /2 = 833 x1.6 =\$1333 will be the carrying cost 2.The estimated total set-up cost for the flag displays for the coming year is 60 x 50 = \$3000
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Unformatted text preview: 3.If Liberty Celebrations were to schedule 30 equal production runs of the flag display for the coming year, instead of 60 equal runs, the sum of carrying costs and set-up costs for the coming year would increase (decrease) by 100000/30 = 3333/2 = 1667 x 1.6 =\$2666+ 30*50 = 1500 = \$4166 for 30 flags per production run Difference will be = 4333-4166 = 167 decrease in total cost 4.The number of production runs per year of the flag displays that would minimize the sum of carrying costs and set-up costs for the coming year is (2*100000*50/1.6)^0.5 = 2500 flags per production run, it means there should be total 100000/2500 = 40 production run. 5.A safety stock of a 3-day supply of flag displays would increase Liberty Celebrationâ€™s planned average inventory in units by 100000/250 x 3 = 1200 flags. </p><p>I will tip for this, I need an answer asap please</p>...
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