Question

A large bakery makes cakes for freezing and subsequent sale. The bakery can produce cakes at the rate of 278 cakes per day. The bakery sets up the cake-production operation and produces until a predetermined number (Q) have been produced. When not producing cakes, the bakery uses its personnel and facilities for producing other bakery items. The setup cost for a production run of cakes is $100. The cost of holding frozen cakes in storage is $9 per cake per year. The annual demand for frozen cakes, which is constant over time, is 54600 cakes. Assume 364 days a year and 52 weeks a year.

What is the "daily" demand rate?

How many frozen cakes to produce in a production cycle? (keep two decimal places)

How many cakes are in the freezers when the bakery stops the production in a given production cycle? (keep two decimal places)

How long is the production cycle?

How long in each production cycle the bakery produces cakes to freeze?

How long in each production cycle the bakery is not producing cakes and can use its personnel and facilities for producing "other" bakery items?

How much is the total annual inventory related costs?

Answer 1