ENIOLA SHOE INC IS A MANUFACTURING FIRM THAT PRODUCES A VARIETY OF SHOES AND BOOTS. THEY HAVE
Question:
ENIOLA SHOE INC IS A MANUFACTURING FIRM THAT PRODUCES A VARIETY OF SHOES AND BOOTS. THEY HAVE RECENTLY STARTED OPERATION OF A FACTORY IN ABUJA AND HAVE OPENED A FACTORY OUTLET STORE ADJACENT TO THE FACTORY. THE PRODUCTION MANAGER AT THE FACTORY IS TRYING TO ASCERTAIN THE OPTIMA NUMBER TO SHEEP SKIN BOOTS TO PRODUCE WITH EACH PRODUCTION RUN. AFTER CAREFUL ANALYSIS HE BELIEVES THAT THE FOLLOWING DATA ARE CORRECT,
a.Annual demand for the boot: 12000 pairs
b.Days/Year the outlet store is open: 240
c.Daily production capacity of the factory: 200 pairs
d.Setup cost incurred to start boot production: 800
e.Annual Storage cost per pair of boots: 60
WHAT SHOULD THE PRODUCTION MANAGER RECOMMEND AS THE OPTIMAL PRODUCTION LOT SIZE?
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling