A manufacturer of greeting cards must determine the size of production runs for a cer- tain popular line of cards. The demand for these cards has been a fairly steady 2 mil- lion per year, and the manufacturer is currently producing the cards in batch sizes of 50,000. The cost of setting up for each production run is $400. Assume that for each card the material cost is 35 cents, the labor cost is 15 cents, and the distribution cost is 5 cents. The accounting department of the firm has established an interest rate to represent the opportunity cost of alternative investment and storage costs at 20 percent of the value of each card. a. What is the optimal value of the EOQ for this line of greeting cards? b. Determine the additional annual cost resulting from using the wrong production lot size.
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Suppose that in the the given problem firm decides to account for the fact that the production rate of the cards is not infinite. Determine the optimal size of each production run assuming that cards are produced at the rate of 75,000 per week.
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