Healthy Plants Ltd. (HP) produces its premium plant food in 50-pound bags. Demand for the product is

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Healthy Plants Ltd. (HP) produces its premium plant food in 50-pound bags. Demand for the product is 100,000 pounds per week. HP operates 50 weeks per year and can produce 250,000 pounds per week. The setup cost is $20 and the annual holding cost rate is $0.55 per bag. Currently, HP produces its premium plant food in batches of 1,000,000 pounds.

(a) Calculate the maximum inventory level for HP.

(b) Calculate the total annual costs of this operating policy.


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Operations Management

ISBN: 978-0470325049

4th edition

Authors: R. Dan Reid, Nada R. Sanders

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