What is optimal lot size-maximum inventory level-total cost

Assignment Help HR Management

Reference no: EM131758806

The Watkins Chemical Company produces a chemical compound that is used as a lawn fertilizer. The compound can be produced at a rate of 10,000 pounds per day. Demand for the compound is 0.6 million pounds per year. The fixed cost of setting up for a production run of the chemical is $1,500, and the variable cost of production is $3.50 per pound. The company uses an annual interest rate of 22% to account for the cost of capital, and the annual costs of storage and handling of the chemical amount to 12% of the value. Assume that there are 250 working days in a year. What is the optimal lot size, maximum inventory level, and total cost?

Reference no: EM131758806

Questions Cloud

Black and decker pursuing in the global marketplace : By the 2000’s, what strategy was Black and Decker pursuing in the global marketplace? How would you characterize its structure?

Start system planning using the components : Start System Planning using components. Describe a fictional healthcare organization: type, size of staff, and amount and type of patients it is able to serve.

Schedules for companies that pursue lowest-cost strategies : What arguments can be made in favor of using compressed work week schedules for companies that pursue lowest-cost strategies?

Why documentation is so important to employee discipline : Discuss why documentation is so important to employee discipline.

What is optimal lot size-maximum inventory level-total cost : Assume that there are 250 working days in a year. What is the optimal lot size, maximum inventory level, and total cost?

Compute the total ordering costs-compute the total costs : How much should we order each time to minimize our total cost? Compute the total ordering costs. Compute the total costs.

Project risks is in the work breakdown schedule : A good place to characterize and predict with some certainty, the impact of project risks is in the Work Breakdown Schedule (WBS). Why?

Trade offs in adverse conditions is unique set of skills : Negotiating tradeoffs and helping management and project team members ameliorate the impact of trade offs in adverse conditions is a unique set of skills

Define the name-logo and slogan for your fictional brand : Create a brand of your own. The brand can be of any product or service. Define the name, logo and slogan for your fictional brand.

User Account

All Pages