Quiz 05_Solution - 6A:130 Fall 2007 Quiz 5 QUIZ 5: is due...

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6A:130 – Fall 2007 Quiz 5 QUIZ 5: is due at beginning of class; Section 1 – Tuesday, 10/30; Section 2 – Wednesday 10/31. To receive credit you must show your work . Liberty manufactures a line of flag displays. Annual demand for its flag displays is estimated at 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 has 250 business days per year. Assume that sales occur uniformly throughout the year and production is instantaneously. 1. If Liberty does not maintain a safety stock the estimated total carrying cost for the flag display for the coming year is__________. 100,000/60 = 1,666.67 (quantity ordered) x $1.60 / 2 = $1,333 2. The estimated total setup cost for the flag display for the coming year is__________. 60 x $50 = $3,000
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