Question: A chemical firm produces sodium bisulfate in 100 pound bags

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. (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 per run?

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  • CreatedDecember 30, 2014
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