Answered: D-alcohol is an alcohol factory in…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 40E

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D-alcohol is an alcohol factory in Kyoto. The most popular products of D-alcohol are A, B, C, and D, whose demands are 30, 40, 60, and 50 kg per hour respectively. The setup times for A, B, C, and D are 1/2, 1/3, 1/2, and 1/4 hours respectively. The production line produces A, B, C, and D in sequence and repeats this sequence iteratively (e.g., a sequence is a production cycle). The production line is able to produce 200 kg per hour.

What is the batch size to minimize inventory and also satisfy customer demands if we regard A, B, C, and D as a batch?
Based on (a), what is the production quantity of A during a production cycle.
Suppose that the rates of consumption and fabrication of product A are constant numbers, based on (a), what is the average inventory of A?

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