What proportion of each production cycle is uptime

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Reference no: EM132176175

Sohn Industries produces a chemical compound that is used as chile fertilizer. The compound can be produced at a rate of 10,000 pounds per day. Annual demand is 0.6 million pounds. The fixed cost for set up is 1500 dollars and the variable cost is 3.50 dollars per pound. Sohn industries uses a 22 percent accounting for cost of capital, and the costs of storage and handling is 12 percent of the value. Assume there are 250 working days a year. If you make other assumptions please list them.

What is the optimal production run?

What proportion of each production cycle is uptime and how much is downtime at the optimal?

What is the average annual holding costs and setup attributed to the item?

If the compound sells for 3.90 dollars per pound, what is the annual profit for Sohn Industries?

Reference no: EM132176175

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