Assume that a production line operates such that the production lot size model o
ID: 2786689 • Letter: A
Question
Assume that a production line operates such that the production lot size model of is applicable. Given D = 6600 units per year, Co = $120, and Ch = $2 per unit per year. Compute the minimum cost production lot size for each of the following production rates:
If required, round your answers to the nearest whole number.
Q* =
What two observations can you make about the relationship between the EOQ model and the production lot size model?
Production Lot Size Q* is always q1 than the EOQ Q* with the q2 D, Co, and Ch values.
As the production rate P q3 , the recommended Q* decreases, but always remains q4 than the EOQ Q*.
a. 8200 units per year b. 11500 units per year c. 32000 units per year d. 90000 units per yearExplanation / Answer
Minimum cost production lot-size= Q*=Sq.rt.of ((2*Co*D)/(Ch*(1-D/P)) a. P= 8200 Q*=Sq.rt.of ((2*120*6600)/(2*(1-6600/8200))) 2015 b.P=11500 Q*=Sq.rt.of ((2*120*6600)/(2*(1-6600/11500))) 1363 c. P=32000 Q*=Sq.rt.of ((2*120*6600)/(2*(1-6600/32000))) 999 d. P=90000 Q*=Sq.rt.of ((2*120*6600)/(2*(1-6600/90000))) 924 Production Lot Size Q* is always greater than the EOQ Q* with the production rate, p, D, Co, and Chvalues. As the production rate P increases , the recommended Q* decreases, but always remains greater than the EOQ Q*.
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