Reference no: EM132255258

Clippity-Clop Saddle Manufacturing Company purchases its leather from the Orange Tannery in Knoxville, Virginia. The tannery purchases hides from the slaughterhouse for $ 50.00 per hide. A whole hide yields approximately 25 square feet, and the tannery purchases an average of 200,000 hides per year. In order to be transformed in the type of leather that Clippity-Clop purchases, the hides have to be processed. They have to be soaked in brine, washed, limed, de-greased, pickled, and dyed—and it’s actually more complicated than that. Let’s assume that the tannery can process an average of 2,000 hides per week (there are 50 weeks in year) to obtain this type of leather. The Orange Tannery sells 1,200,000 square feet per year of the specific type of leather called “saddle leather” that Clippity-Clop purchases. The costs of setting up the process to make saddle leather is $ 1,300. The tannery keeps the finished leather in a warehouse at a cost of $ 0.15 per square foot per year.

What is the quantity of saddle leather that the tannery will process at one time?

(a) 150,000 square feet

(b) 275,000 square feet

(c) 200,000 square feet

(d) 75,000 square feet

(e) 144,000 square feet

What is the average inventory level for the tannery for the saddle leather it produces?

(a) 65,750 square feet

(b) 100,000 square feet

(c) 21,650 square feet

(d) 78,000 square feet

(e) 52,000 square feet