Question

The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per day. FSF supplies hot dogs to local restaurants at a steady rate of 270 per day. The cost to prepare the equipment for producing hot dogs is $66. Annual holding costs are 45 cents per hot dog. The factory operates 291 days a year.

a. Find the optimal run size. (Do not round intermediate calculations. Round your answer to the nearest whole number.)
  
Optimal run size             

b. Find the number of runs per year. (Round your answer to the nearest whole number.)
  
Number of runs             

c. Find the length (in days) of a run. (Round your answer to the nearest whole number.)
  
Run length (in days)            

Answer 1

Given p = 5000 per day

usage u = 270 per day

Annual demand D = 270 *291 = 78570 hot dogs per year

Order cost S = $66

Holding Cost H = $.45/hotdog per yr

a)optimal run size

= 4935.868 4936

b) number of runs per year

no of runs per year = D/Q_o = 78570/4936

= 15.91( round to 16) = 16 runs/year

c) Find the length (in days) of a run.

Run length = Q_o/p = 4936/ 5000

= 0.987 days or approximately 1 day