Using the data provided in Problem 23, determine whatwill happen if HP uses the economic production quantity modelto establish the quantity produced each cycle.(a) Calculate the economic production quantity (EPQ).(b) Calculate the maximum inventory level using the EPQ.(c) Calculate the total annual cost of using the EPQ.(d) Calculate the penalty cost HP is incurring with its currentpolicy [23. Healthy Plants Ltd. (HP) produces its premium plantfood in 50-pound bags. Demand for the product is 100,000pounds per week. HP operates 50 weeks per year and canproduce 250,000 pounds per week. The setup cost is $200and the annual holding cost rate is $0.55 per bag. Currently,HP produces its premium plant food in batches of 1,000,000pounds.(a) Calculate the maximum inventory level for HP.(b) Calculate the total annual costs of this operating policy]

Using the data provided in Problem 23, determine whatwill happen if HP uses the economic production quantity modelto establish the quantity produced each cycle.(a) Calculate the economic production quantity (EPQ).(b) Calculate the maximum inventory level using the EPQ.(c) Calculate the total annual cost of using the EPQ.(d) Calculate the penalty cost HP is incurring with its currentpolicy [23. Healthy Plants Ltd. (HP) produces its premium plantfood in 50-pound bags. Demand for the product is 100,000pounds per week. HP operates 50 weeks per year and canproduce 250,000 pounds per week. The setup cost is $200and the annual holding cost rate is $0.55 per bag. Currently,HP produces its premium plant food in batches of 1,000,000pounds.(a) Calculate the maximum inventory level for HP.(b) Calculate the total annual costs of this operating policy]

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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