Question6. A producer can produce 2500 units of woodparts per day at a plant located in USA.The steady demand for wood parts is 500units per day. The set up cost for theequipment to the company is $ 50.00. Theannual carrying cost for the wood part is $1.00 per unit. The facility operates 200 days ayear:a) Calculate the optimal run sizeb) Average inventoryc) Total cost of carrying + ordering per yeard) The numbers of production run per yeare) Length of a production run in days

Given that, Yearly demand is 500 * 200 = 100000 The arrangement cost is $50 holding…

Answered: A producer can produce 2500 units of…

A producer can produce 2500 units of wood rts per day at a plant located in USA. e steady demand for wood parts is 500 its per day. The set up cost for the uipment to the company is $ 50.00. The

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Proudction Costs

Section: Chapter Questions

Problem 8SQP

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

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