# Mgmf2 1 A small business company is considering updating the current production line There are two p

Mgmf2 1 A small business company is considering updating the current

production line There are two plans For plan A, the fixed cost will be

\$35,000 and the variable cost will be \$25 per unit after the update For

plan B, the fixed costs will be \$45,000 and the variable cost will be \$23

(a) Suppose the selling price is \$35, what is the break-even volume for

each plan? Which plan has a lower break-even volume?

(b) Suppose the selling price is \$35 Also, the company aims to achieve a

profit of \$5,000 after the update What selling volume will be required to

achieve the profit for each plan? Which plan has a lower volume? 2 A service garage uses 1600 boxes of cleaning cloths a year Ordering

cost is \$30 and holding cost is \$06 on an annual basis Please compute

the following tasks using EOQ model

(a) The economic order quantity based on EOQ model?

(b) The total cost of ordering and carrying

(c) Suppose the current order size is 200 What additional annual cost is

the company incurring by staying with the order size 200? 1 3 Demand for walnut fudge ice cream at the Sweet Cream Dairy can be

approximated by a normal distribution with a mean of 23 gallons per

week and a standard deviation of 25 gallons per week The new

manager desires a service level of 90 percent Lead time is two days, and

the dairy is open seven days a week (Hint: Work in terms of weeks)

If a fixed-interval model is used, what order size would be needed for the

90 percent service level with an order interval of 12 days and a supply of

10 gallons on hand at the order time? Extra Credit

A grocery shop that makes candles offers a scented candle, which can be

produced at a rate of 36 boxes per day and used 12 boxes per day

Assume that demand is uniform throughout the year and the shop opens

for 360 days Setup cost is \$80 for a run, and holding cost is \$2 per box

on a yearly basis Please compute the following tasks using EPQ model:

(a) The economic run size

(b) The maximum inventory