Question

FalCanBurp’s Famous Brewery just got a huge new order…1,000 cases of Erick’s Elixer, a delightful brew of mulberry juice with hints of chocolate and gunpowder. The catch is that the order must be ready to deliver in 5 days. The boss says “no overtime” so the order has to be produced during their normal 10-hour work day.

1. If there are 36 cans in a case, how many cans must be produced each hour to make the deadline?
2. FalCanBurp’s has two bottling facilities.
   • #1 runs 4mph, fills 300 cans/hr, with 98% efficiency
   • #2 runs 2mph, fills 700 cans/hr, with 88% efficiency
   • Assuming a factor of 6.95, which facility should they put this new order in.

FalCanBurp’s knows they’ll need a new bottling facility in 7 years. That facility will cost $1,009,888. How much do they need to invest today to fund that planned purchase if…

• They can get an annual investment interest rate of 4%
• They can get an annual investment interest rate of 5.75%
• They can get an annual investment interest rate of 14%

SHOW YOUR WORK

Answer 1

There are 36 cans. We need 1000. We need to produce 1000-36 = 964

We have 5 days, 10hr per day so 50hrs to make them.

Cans need to be produced per hr = 964/50 = 19.28

Facility 1: 300 * 0.98/6.95 = 42.30 cans per hr

Facility 2: 700*0.88/6.95 = 88.63 cans per hr

They can put any of the facility as both can meet demand. Facility 2 is preferred as it can meet demand quickly.

FV = $1,009,888; T = 7years

if I = 4% ; Current Investment Required = $1,009,888/(1.04)7 = 767,431

if I = 5.75% ; Current Investment Required = $1,009,888/(1.0575)7 = 683,280

if I = 14% ; Current Investment Required = $1,009,888/(1.14)7 = 403,600