Use the Table Below to Answer the Following Questions) Use a Linear Optimization Model Based on the Data to Hides

question 44

Multiple Choice

Use the table below to answer the following questions) .
Letherin Hides is a company that makes boots specifically targeting college students. Forecasts of sales for the next year are 200 in the summer, 450 in the autumn, and 500 in the winter.
Accessories that are used on the boots are purchased from a supplier for $31.66. The cost of capital is estimated to be 24% per year or 6% per quarter) ; thus, the holding cost per item is
0.06$31.66) = $1.9 per quarter rounded figure) . Letherin Hides hires freelance art designers at part-time to craft designs during the summer, and they earn $6 per hour. In the autumn, labor is more difficult to keep, and the owner must pay $6.5 per hour to retain qualified help. Because of the high demand for part-time help during the winter holiday season, labor rates are higher in the winter, and workers earn $7.75 per hour. Each boot design takes 2 hours to complete. How should production be planned over the three quarters to minimize the combined production and inventory holding costs?
The table below provides information on Letherin Hides boot design cost and production. $$\begin{array} { | l | l | l | l | } \hline \text { Datherin Hides } & & & \\\hline & & & \\\hline \text { Data }& & \\\hline & & & \\\hline & \text { Sumuner } & \text { Autumn } & \text { Winter } \\\hline \begin{array} { l } \text { Unit Production } \\\text { Cost }\end{array} & 12 & 13 & 15.5 \\\hline \text { Unit Inventory } & & & \\\text { Holding Cost } & 1.9 & 1.9 & 1.9 \\\hline \text { demand } & 200 & 450 & 500 \\\hline\end{array}$$ Use a linear optimization model based on the data to answer the following questions.
-According to the linear optimization model, what is the total amount to be produced in summer?

• A) 200
• B) 100
• C) 550
• D) 0

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Definitions:

Option Price

The cost at which an option's holder has the right to purchase (for a call option) or sell (for a put option) the underlying asset or commodity.

Market Value

The present rate at which a service or asset is available for purchase or sale in the market.

Equity

The value of an asset after deducting the amount of all liabilities on that asset. In investing, it often refers to the ownership interest held by shareholders in a corporation.

Firm's Debt

The total amount of money a company owes to creditors, including loans, bonds, and other forms of debt.