Evaluate the existing capacity against seasonal demand as a function of under-utilization or overcapacity. Inventory: 10,000 units
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Evaluate the existing capacity against seasonal demand as a function of under-utilization or overcapacity. Inventory: 10,000 units at $5 holding cost per unit per month.
● Ordering: Average order cost is $100 for 2,000 units.
● Operating Schedule: 300 days per year.
● Manufacturing: 7 steps with specified cycle times, 10% defect rate, and a $15 rework cost per defective unit.
● Demand: Seasonal variance with 500 units/day at peak and 150 units/day at trough.
● Production: Maximum capacity is 400 units/day.
● Costs: Fixed costs at $600,000/year, variable cost at $250/unit, and selling price at $500/unit.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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