Total annual inventory costs and optimal cycle time

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Reference no: EM13961251

The Ambrosia Bakery makes cakes for freezing and subsequent sale. The bakery, which operates five days a week, 52 weeks a year, can produce cakes at the rate of 116 cakes per day. The bakery sets up the cake-production operation and produces until a predetermined number (Q) have been produced. When not producing cakes, the bakery uses its personnel and facilities for producing other bakery items. The setup cost for a production run of cakes is $700. The cost of holding frozen cakes in storage is $9 per cake per year. The annual demand for frozen cakes, which is constant over time, is 6000 cakes. Determine the following:

Optimal production run quantity (Q):

Total annual inventory costs:

Optimal number of production runs per year

Optimal cycle time (time between run starts):

Run length in working days:

Reference no: EM13961251

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