Suds\'s Bottling Company does bottling, labeling, and distribution work for seve

Question

Suds's Bottling Company does bottling, labeling, and distribution work for several local microbreweries. The demand rate for Wortman's beer is 600 cases (24 bottles each) per week. Suds's bottling production rate is 2,300 cases per week, and the setup cost is $600. The value of inventory is $11. 50 per case, and the annual holding cost is 30 percent of the inventory value. Suds's Bottling Company operates 52 weeks per year. What is the economic production lot size? The economic production lot size is cases.

Explanation / Answer

Quantity of material or units of a manufactured good that can be produced or purchased within the lowest unit cost range. It is determined by reconciling the decreasing unit cost of larger quantities with the associated increasing unit cost of handling, storage, insurance, interest, etc.

Wortman Beer Demand 600 Cases Bottling Prod Rate 2300 Cases Setup Cost 600 Inventory Value/case 11.5 Holding Cost 3.45 Operation 52 Weeks/year Prod Lot Size 119600

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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