What is minimum total annual cost for fast moving colors

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Reference no: EM133641521

Question

A t-shirt manufacturer uses one line to make 10 different colors of fabric. Each yard of fabric costs $5 regardless of color and the annual inventory holding cost rate for these fabrics is 20%. Every time the manufacturer changes the line from one color to another, it spends $350 in set up (or "ordering") costs. The different color fabrics sold by this manufacturer are divided into three categories. There are five slow moving colors that average 2,000 yards per year per color, three medium moving colors that average 10,000 yards per year per color, and two fast moving colors that average 20,000 yards per year per color. Assume that production time per color batch is insignificant relative to days of demand per batch. What is the minimum total annual cost for all fast moving colors?

Reference no: EM133641521

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