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:

Special Account

An account created for a specific, often non-routine, purpose, which may involve unique transactions or conditions.

Withdraw

The act of removing funds from a bank account or the action of retracting from a position or commitment.

Present Value

The present value of a future amount of money or series of cash flows, based on a certain return rate.

Cash Flow

The entire sum of funds moving in and out of a company, notably influencing its available cash resources.