A production line has three production stations, A, B, and C. In-process storage is possible between...
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A production line has three production stations, A, B, and C. In-process storage is possible between the stations, but at the monthly cost of $120 for storage between A and B and $100 between B and C. The storage would offset any station downtime in the preceding station(s). Income per item produced is $10 and the maximum monthly production rate is 1000 units. If the downtimes for stations A, B, and C are 2, 3, and 5 percent, respectively, determine the optimum income-cost relationship from the four possible configurations of in-process inventory management. Assume the station downtimes are statistically independent. A production line has three production stations, A, B, and C. In-process storage is possible between the stations, but at the monthly cost of $120 for storage between A and B and $100 between B and C. The storage would offset any station downtime in the preceding station(s). Income per item produced is $10 and the maximum monthly production rate is 1000 units. If the downtimes for stations A, B, and C are 2, 3, and 5 percent, respectively, determine the optimum income-cost relationship from the four possible configurations of in-process inventory management. Assume the station downtimes are statistically independent.
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To determine the optimum incomecost relationship from the four possible configurations of inprocess inventory management we need to consider each conf... View the full answer
Related Book For
Management And Cost Accounting
ISBN: 9781292232669
7th Edition
Authors: Alnoor Bhimani, Srikant M. Datar, Charles T. Horngren, Madhav V. Rajan
Posted Date:
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