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Lamda Computer Products competed for and won a contract to produce tow prototype units of a new type of computer that is based on laser optics rather than on electronic binary bits. The first unit produced by Lamda took 5,000 hours to produce and required $250,000 worth of material, equipment usage and supplies. The second unit took 3,500 hours and used $200,000 worth of materials, equipment usage and supplies. Labour is $30 per hour.
a. Lamda was asked to present a bid for 10 additional units as soon as the second unit was completed. Production would start immediately. What would this bid be?
b. Supposed there was a significant delay between the contracts. During this time, personnel and equipment were reassigned to other projects. Explain how this affect the subsequent bid?
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Item Cost - $7.00 Order Cost - $283.00 Annual Hold - 32% of item cost Annual Demand - 22,100 Average Demand - 442 per week Standard deviation of weekly demand 20 per week lead time
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