A company produces a product. The demand for this product is 400 units per year, and the
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A company produces a product. The demand for this product is 400 units per year, and the production rate is 2000 units per year. To initiate production, the system has to checked and cleaned, and it costs the company $100 per set-up. The cost to produce one unit is $3, and the inventory holding cost is estimated as 20 percent annuallyIf the demand for this product exceeds the available inventory, it is backlogged. The loss of goodwill is estimated to be $0.1 per unit short, and the shortage penalty is estimated to be $1.2 per unit short per year. Calculate time to recover from backlog, time to generate a maximum of inventory, time to deplete inventory, and time to generate backlog.
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