Kellam Images Prints Snack Food Bags on Long Rolls of Plastic

question 31

Essay

Kellam Images prints snack food bags on long rolls of plastic film.The plant operates 250 days a year.The daily production rate is 6000 bags,and the daily demand is 3500 bags.The cost to set up the design for printing is $300.The holding cost is estimated at 2 cents per bag.
a.What is the recommended production lot size?
b.If there is a five-day lead time to set up the line,what is the recommended reorder point?

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Definitions:

Annual Interest Rate

The percentage of interest that is charged or earned on an investment or loan over a one-year period.

Down Payment

An initial payment made when purchasing an item on credit, particularly real estate, often expressed as a percentage of the purchase price.

Annual Interest Rate

The annual interest rate is the percentage of principal charged by the lender for the use of its money over one year.

Down Payment

An initial upfront partial payment for the purchase of expensive items/services such as a home or a car.