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

question 23

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 net production for winter?

• A) 0
• B) 950
• C) 200
• D) 500

---

Definitions:

Fair Market Value

The estimated price at which an asset would trade in a competitive auction setting.

Gain on Disposal

The profit realized from the sale of assets, other than inventory, for more than their carrying amount on the books.

Financial Statements

Comprehensive reports created to communicate a company's financial performance and position during a specific period, often including a balance sheet, income statement, and cash flow statement.

Loss on Disposal

The monetary deficit experienced when selling an asset below its recorded value.