Author Question: Consider a local club selling Christmas trees. If trees cost $15 and sell for $60 with no salvage ... (Read 107 times)

Destiiny22 · **on:** Dec 3, 2019

Question 1

Consider a product with a daily demand of 400 units, a setup cost per production run of $100, a monthly holding cost per unit of $2.00, and an annual production rate of 292,000 units. The firm operates and experiences demand 365 days per year. Suppose that management mistakenly used the basic EOQ model to calculate the batch size instead of using the POQ model. How much money per year has that mistake cost the company?

Question 2

Consider a local club selling Christmas trees. If trees cost $15 and sell for $60 with no salvage value, what is the ideal service level? If salvage value is increased to $5, what is the change in service level?

sarajane1989 · **Reply #1 on:** Dec 3, 2019

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