Test2-F08_partialKey - Partial Answer Key MGMT 46000 Test 2...

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Test2-F08_partialKey.doc MGMT 46000 Test 2 Time: (1 Hour) Nov 6, 2008 Question 2 [20 points: 3+2+2+3, 10] Part (A): The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per day. FSF suppliers hot dogs to local restaurants at a steady rate of 250 per day. The cost to prepare the equipment for producing hot dogs is $66. Annual holding costs are 42 cents per hot dog. The factory operates 300 days a year. Find i. The optimal lot size (round off to the nearest multiple of 100) 0 2 2 250 300 66 5000 5000 0.42 5000 250 DS p Q Hp u ××× == −− unit ii. Run time in days. =Q/p=5000/5000=1 day iii. The number of production runs per year 250*300/5000=15 runs iv. AIC for the lot size in (i). Show calculations for annual set-up and annual holding costs. / ( ) /(2 ) 15 66 0.42 / 2 (5000 250) 5000/ 5000 $1987.5 AIC SD Q H p u Q p =+ = × + × × = Part (B): Demand for a product satisfying EOQ assumptions is 9000 units / year. Ordering cost is $300 and holding cost is 1.5% of the /unit / year. Purchase price from vendor X is $120 /unit. Suppose vendor Y gives you a 2% discount on purchase price if you buy at least 4500 units. Assume that per unit holding cost is not affected (same as vendor X).
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This note was uploaded on 01/21/2011 for the course MGMT 46000 taught by Professor Panwalker during the Fall '08 term at Purdue University-West Lafayette.

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Test2-F08_partialKey - Partial Answer Key MGMT 46000 Test 2...

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