Explain the economic production

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Reference no: EM1393422

1 The owner of Chips Etc. produces two kinds of chips: Lime (L) and Vinegar (V). He has a limited amount of the three ingredients used to produce these chips available for his next production run: 4,800 ounces of salt, 9,600 ounces of flour, and 2,000 ounces of herbs. A bag of Lime chips requires 2 ounces of salt, 6 ounces of flour and 1 ounce of herbs to produce; while a bag of Vinegar chips requires 3 ounces of salt, 8 ounces of flour and 2 ounces of herbs. Profits for a bag of Lime chips are $0.40 and for a bag of Vinegar chips $0.50. Which of the following is not a feasible production combination?

a. 0L and 1200V
b. 0L and 0V
c. 0L and 1000V
d. 1000L and 0V

2 The local grocery store consists of two cashiers. The customers arrive according to the Poisson Distribution and the service times are based on negative exponential distribution. The average customer service time is five minutes and the average time between the arrivals of successive customers is 3 minutes. On the average, hom much time will the customer spend in line waiting to be served?

a. 16.2 minutes
b. 14.4 minutes
c. 18.2 minutes
d. 13.6 minutes
e. 11.2 minutes

3 The economic production quantity is 500 units (units are delivered to the user department as they come off the production line). If the firm decides to buy this item from an outside supplier rather than producing it, the economic purchase quantity would probably be (assume the inventory costs of production and purchasing and purchasing an item are the same):

a. The direction of change in quantity cannot be determined without additional information.
b. 500 units
c. less than 500 units
d. more than 500 units

4 Mallory Furniture buys two products for resale: big shelves (B) and medium shelves (M). each shelf costs $500 and requires 100 cubic feet of storage space, and each medium shelf costs $300 and requires 90 cubic feet of storage space. The company has $75,000 to invest in shelves this week, and the warehouse has 18,000 cubic feet available for storage. Profit for each big shelf is $300 and for each medium shelf is $150. What is the storage space constraint?

a. 300B + 500M ? 18000
b. 500B + 300M ? 18000
c. 100B + 90M ? 18000
d. 90B + 100M ? 18000
E. 100B + 90M ? 18000

Reference no: EM1393422

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