Question: Greener Pastures Incorporated GPI produces a high quality organic lawn food

Greener Pastures Incorporated (GPI) produces a high-quality organic lawn food and weed eliminator called Super Green (SG). Super Green is sold in 50-pound bags. Monthly demand for Super Green is 75,000 pounds. Greener Pastures has capacity to produce 24,000 50-pound bags per year. The setup cost to produce Super Green is $300. Annual holding cost is estimated to be $3 per 50-pound bag. Currently, GP is producing in batches of 2500 bags.
(a) Calculate the total annual costs of the current operating policy at GPI.
(b) Calculate the economic production quantity (EPQ).
(c) Calculate the total annual costs of using the EPQ.
(d) Calculate the penalty cost incurred with the present policy.

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  • CreatedJuly 11, 2014
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