Assume that a production line operates such that the production lot size model is applicable. Assume that D = 4,900 units per year, C = $100, and C₁ = $2 per unit per year. (a) Compute the minimum cost production lot size for each of the following production rates. (Round your answers to the nearest integer.) (i) 8,000 units per year Q* = (ii) 10,000 units per year Q* = (iii) 32,000 units per year Q* = (iv) 100,000 units per year (b) Compute the EOQ recommended lot size using equation Q* = Q* = 2DCo Comparing the EOQ lot size to the various production lot sizes in part (a), what observations can you make about the relationship between the EOQ model and the production lot size model? (Select all that apply.) As production rate P increases, production lot size Q* increases. O EOQ Q* is greater than production lot size Q*. O Production lot size Q* and EOQ Q* are equal. O Increasing production rate P does not affect production lot size Q*. O Production lot size Q* is greater than EOQ Q*. As production rate P increases, production lot size Q* decreases.
Assume that a production line operates such that the production lot size model is applicable. Assume that D = 4,900 units per year, C = $100, and C₁ = $2 per unit per year. (a) Compute the minimum cost production lot size for each of the following production rates. (Round your answers to the nearest integer.) (i) 8,000 units per year Q* = (ii) 10,000 units per year Q* = (iii) 32,000 units per year Q* = (iv) 100,000 units per year (b) Compute the EOQ recommended lot size using equation Q* = Q* = 2DCo Comparing the EOQ lot size to the various production lot sizes in part (a), what observations can you make about the relationship between the EOQ model and the production lot size model? (Select all that apply.) As production rate P increases, production lot size Q* increases. O EOQ Q* is greater than production lot size Q*. O Production lot size Q* and EOQ Q* are equal. O Increasing production rate P does not affect production lot size Q*. O Production lot size Q* is greater than EOQ Q*. As production rate P increases, production lot size Q* decreases.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 33P: Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand...
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Transcribed Image Text:Assume that a production line operates such that the production lot size model is applicable. Assume that D = 4,900 units per
year, Co = $100, and C₁ = $2 per unit per year.
(a) Compute the minimum cost production lot size for each of the following production rates. (Round your answers to the
nearest integer.)
(i) 8,000 units per year
Q*
(ii) 10,000 units per year
Q*
(iii) 32,000 units per year
Q* =
(iv) 100,000 units per year
Q* =
(b) Compute the EOQ recommended lot size using equation Q* =
Q* =
2DC
Ch
Comparing the EOQ lot size to the various production lot sizes in part (a), what observations can you make about the
relationship between the EOQ model and the production lot size model? (Select all that apply.)
As production rate P increases, production lot size Q* increases.
O EOQ Q* is greater than production lot size Q*.
O Production lot size Q* and EOQ Q* are equal.
O Increasing production rate P does not affect production lot size Q*.
Production lot size Q* is greater than EOQ Q*.
As production rate P increases, production lot size Q* decreases.
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