Explain how much could the organization save annually

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Reference no: EM1377471

Q. A chemical industry produces sodium bisulphate in 100-pound bags. Demand for this product is 20 tons per day. The capacity for producing the product is 50 tons per day. Setup costs $100 also storage also handling costs is $5 per ton a year. The industry operates 200 days a year. (Note: 1 ton=2,000 pounds.)

a. Explain how many bags per run are optimal?

b. Illustrate what would the average inventory be for this lot size?

c. Conclude the approximate length of a production run, in days.

d. About explain how many runs per year would there be?

e. Explain how much could the organization save annually if the setup cost could be reduced to $25 per run?

Reference no: EM1377471

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