A manager must decide which type of machine to buy, A, B, or C. Machine costs are а. Machine Cost $40,000 $30,000 $80,000 A B Product forecast and processing times on the machines are as follows: Product Annual Demand Processing Time per unit (Hour) А В C 1 16,000 3 4 2 2 12,000 4 3 3 6,000 30,000 6. 4 4 1 Assume that only purchasing costs are being considered. Which machine would have the lowest total cost, and how many of that machine would be needed? Machine operates 10 hours a day, 250 days a year.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter5: Network Models
Section5.3: Assignment Models
Problem 10P
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A manager must decide which type of machine to buy, A, B, or C. Machine costs are
а.
Machine
Cost
$40,000
$30,000
$80,000
A
В
C
Product forecast and processing times on the machines are as follows:
Product
Annual Demand
Processing Time per unit (Hour)
А
В
C
16,000
12,000
6,000
30,000
1
3
4
2
2
4
3
3
4
4
1
Assume that only purchasing costs are being considered. Which machine would have the lowest
total cost, and how many of that machine would be needed? Machine operates 10 hours a day, 250
days a year.
b.
A produce distributor uses 800 packing crates a month, which it purchases at a cost of $10
each. The manager has assigned an annual carrying cost of 35 percent of the purchase price per
crate. Ordering costs are $28.
i. Find the optimal quantity.
ii. What is the total annual cost if EOQ is ordered?
Transcribed Image Text:A manager must decide which type of machine to buy, A, B, or C. Machine costs are а. Machine Cost $40,000 $30,000 $80,000 A В C Product forecast and processing times on the machines are as follows: Product Annual Demand Processing Time per unit (Hour) А В C 16,000 12,000 6,000 30,000 1 3 4 2 2 4 3 3 4 4 1 Assume that only purchasing costs are being considered. Which machine would have the lowest total cost, and how many of that machine would be needed? Machine operates 10 hours a day, 250 days a year. b. A produce distributor uses 800 packing crates a month, which it purchases at a cost of $10 each. The manager has assigned an annual carrying cost of 35 percent of the purchase price per crate. Ordering costs are $28. i. Find the optimal quantity. ii. What is the total annual cost if EOQ is ordered?
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