Problem # 10 - Please see attached.

10. A chemical firm produces sodium bisulfate in 100-pound bags. Demand for this product is 20 tons per day. The capacity for producing the product is 50 tons per day. Setup costs $100, and storage and handling costs are $5 per ton a year. The firm operates 200 days a year. (Note: 1 ton = 2,000 pounds.)

a. How many bags per run are optimal?

b. What would the average inventory be for this lot size?

c. Determine the approximate length of a production run, in days.

d. About how many runs per year would there be?

e. How much could the company save annually if the setup cost could be reduced to $25.00 per run?

10. A chemical firm produces sodium bisulfate in 100-pound bags. Demand for this product is 20 tons per day. The capacity for producing the product is 50 tons per day. Setup costs $100, and storage and handling costs are $5 per ton a year. The firm operates 200 days a year. (Note: 1 ton = 2,000 pounds.)

a. How many bags per run are optimal?

b. What would the average inventory be for this lot size?

c. Determine the approximate length of a production run, in days.

d. About how many runs per year would there be?

e. How much could the company save annually if the setup cost could be reduced to $25.00 per run?

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