Scenario C.1 Jerry Allison Is in Charge of Production for a Small

question 18

Multiple Choice

Scenario C.1
Jerry Allison is in charge of production for a small producer of plumbing supplies. The cricket model has an estimated annual demand of 12,000 units and can be produced at a production rate of 90 units per day. The company produces (and sells) the cricket 300 days per year. Setup cost to produce this model averages $22 and the item has a holding cost of $3 per unit per year.
-Use the information in Scenario C.1. If Jerry chooses to produce the batch size suggested by the economic production lot size (ELS) model, what is the annual cost?

• A) less than or equal to $900
• B) greater than $900 but less than or equal to $950
• C) greater than $950 but less than or equal to $1,000
• D) greater than $1,000

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Definitions:

Problem Solving

The process of finding solutions to difficult or complex issues by identifying the problem, planning an approach, and implementing a solution.

Insight

A sudden realization or understanding of a problem's solution, often occurring after a period of contemplation or thinking from a different perspective.

Heating Vent

A component of a heating, ventilation, and air conditioning (HVAC) system that distributes warm air throughout a space to maintain a desired climate.

Juice Glass

A small glass designed for serving juice, typically holding 4 to 6 ounces of liquid.