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Calculating Optimum run size and number of runs per year

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The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per day. FSF suppies hot dogs to local restaurants at a steady rate of 250 per day. The cost to prepare the equipment for producting hot dogs is $66. Annual holding costs are 45 cents per hot dog. The factory operates 300 days a year. Find:

a) The optimum run size
b) The number of runs per year.
c) The length (in days) of a run.

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Solution:

a) The optimum run size
Annual Demand=Q=300*250=75000 units
S = estimated cost of setting up a production ...

Solution Summary

Solution describes the steps to find out optimum run size, number of runs per years and lenght of a run.

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