Question: need help with problem #2 only please show all work 2. It appears to you that increasing the number of print runs reduces total costs


2. It appears to you that increasing the number of print runs reduces total costs for the year. Motivated by this idea, you decide to divide the 1,200,000 books into a twelve-monthly production runs of 100,000 books each. A) Create a graph similar to the one in Problem #1 of this exam. Use graph paper and include the graph for your work in this part (You can glue the graph to your exam paper if necessary). Label both axes as in the graph above (you will have to modify the y-axis values for this part but should use the same x-scale). B) What are the setup costs for twelve (monthly) print runs? C) What are the production costs? D) What are the storage costs? E) Fill in the amounts from your work above and compute the total costs for the year: C = (Setup Costs) + (Production Costs) + (Storage Costs) A) Setup Costs: Each print run costs $5,000 B) Production Costs: Each book costs $1 to produce C) Storage Costs: Monthly storage costs for books awaiting shipment average 1 per book. If you decide to print all 1,200,000 books (the total for the year, 100,000 books per month for 12 months) in a single run at the start of the year and sales run as predicted, then the number of books in stock would begin at 1,200,00 and decrease to zero by the end of the year, as shown in the graph below. 1. You have an idea. To cut down on storage costs you will print the book in two print runs of 600,000 each, as shown in the figure below. 600,000 500,000 400,000 Average number in stock 300,000 200,000 100,000 0 0 1 2 3 4 5 6 7 8 9 10 11 12 Month A) What are the setup costs for two print runs? B) What are the production costs? C) What are the storage costs? D) What is the total cost for the year? Books in stock
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
