Determine the optimal production quantity, Financial Management

Water Wheelies manufactures high-pressure sprinkler heads. These are produced periodically at a rate of 20,000 per month. Demand is steady at 15,000 per month. Each production run has a set-up cost of $120. Variable direct production costs are $6.00 for labour, $2.00 for parts, and $4.00 for raw materials. Water Wheelies uses an annual inventory holding cost of 20% of the unit cost for carrying the unit for one year.

a.    Determine the optimal production quantity during each production run.

b.    Determine the annual holding cost, set-up cost and total cost.

c.     Determine the maximum inventory.

d.     Determine the cycle time between two production runs in days. Assume 250 days per year. In each cycle compute the number of days the production facility is busy (uptime) and the number of days the production facility is idle (downtime).

e.       (3 points) Water Wheelies can double its production rate by using a new technology, but the set-up cost per production run will also double. Determine the economic production quantity and the annual holding and set-up costs.

Posted Date: 2/14/2013 7:29:47 AM | Location : United States







Related Discussions:- Determine the optimal production quantity, Assignment Help, Ask Question on Determine the optimal production quantity, Get Answer, Expert's Help, Determine the optimal production quantity Discussions

Write discussion on Determine the optimal production quantity
Your posts are moderated
Related Questions
What is the Ratios based on historic cost accounts Ratios based on historic cost accounts don't give a true picture of trends, due to the effects of inflation and different acc

Which ratios would a banker be most interested in when considering whether to approve an application for a short-term business loan? Explain. Bankers and another lenders use li

Accounting Period - Accounting Principle Accounting period refers to span of time at the end of that and for which the financial statement are prepared to throw light on the r

Characteristics of Warrants As mentioned earlier, a warrant is a variant of a call option and gives the holder a certain right to purchase shares of the company at a predetermi

Assume that the treasurer of a company has an extra cash reserve of $1,000,000 to invest for six months. The six-month interest rate is 8% per year in the U.S. and 6% per year in G

Enumerate the Internal development of any business or 'organic growth' Business grows using its own internal resources. - Reduces risk of the high cost of integrating cultur

TR has recently been promoted to his first management position. In the past, he very much enjoyed working as part of a team, but is having some difficulty in adapting to his new ro

Q. Show Certificates of Deposits? Certificates of Deposits: Certificate of deposits is papers issued by banks acknowledging fixed deposits for a specified period of time. CPs i

What is the present value of an annuity that makes a quarterly payment of $37,110 for 11 years, assuming an annual yield to maturity of 5%?

Why do total assets equal the sum of total liabilities and equity?Explain. Assets = Liabilities + Equity Assets are the entities of value a business owns. Liabilities ar