Bryson Carpet Mills produces a variety of different carpets. Changing from produ

Question

Bryson Carpet Mills produces a variety of different carpets. Changing from production of one carpet to another involves a setup cost of $3,200. Annual demand for this style is 186,000 yards. Bryson Carpet Mills produces carpet 300 days per year. The production process is most efficient when 8,200 yards per day are produced at a cost of $6.50 per yard. Inventory carrying cost is estimated at 20 percent annually.

What should be the production order quantity? (Round up your answer to the next whole number.)

  Production order quantity ________ yards

Explanation / Answer

Annual Demand - D = 186000

Set up Cost = Co = 3200

Holding Cost - H = 0.2

Cost per yard - C = 6.5

d = (186000 / 300) = 620

p = 8200

POQ = Sqrt((2 * D * Co)/(H * C)) * Sqrt(( p / (p – d))

POQ = Sqrt ( 2*186000*3200)/(0.2*6.5)) * Sqrt((8200/(8200 – 620))

POQ = 31473.65 = 31474 yards

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.