Problem 13-6

A produce distributor uses 800 packing crates a month, which it purchases at a cost of $10 each. The manager has assigned an annual carrying cost of 35 percent of the purchase price per crate. Ordering costs are $28. Currently the manager orders once a month. |

How much could the firm save annually in ordering and carrying costs by using the EOQ? |

Problem 13-9

The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per day. FSF supplies hot dogs to local restaurants at a steady rate of 280 per day. The cost to prepare the equipment for producing hot dogs is $66. Annual holding costs are 45 cents per hot dog. The factory operates 297 days a year. |

a. |
Find the optimal run size. |

Optimal run size | [removed] |

b. |
Find the number of runs per year. |

Number of runs | [removed] |

c. |
Find the length (in days) of a run. |

Run length (in days) | [removed] |

Problem 13-10

A chemical firm produces sodium bisulfate in 100-pound bags. Demand for this product is 30 tons per day. The capacity for producing the product is 50 tons per day. Setup costs $100, and storage and handling costs are $4 per ton a year. The firm operates 200 days a year. ( |

a. |
How many bags per run are optimal? |

Number of bags | [removed] |

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

Average inventory | [removed] bags |

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

Run length | [removed] days |

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

Run per year | [removed] |

e. |
How much could the company save annually if the setup cost could be reduced to $27 per run? |

Savings would be | $ [removed] |