Inventory Control And Planning Neilsen Cookie Company sells its assorted butter cookies in containers that have a net content of 1 lb. The estimated demand for the cookies is 1,000,000 1-lb containers per year. The setup cost for each production run is $500, and the manufacturing cost is $0.50 for each container of cookies. The cost of storing each container of cookies over the year is $0.40. Assuming uniformity of demand throughout the year and instantaneous production, how many containers of cookies should Neilsen produce per production run in order to minimize the production cost?
Hint: Following the method of Example 5, show that the total production cost is given by the function
Then minimize the function C on the interval (0, 1,000,000).
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Chapter 4 Solutions
Applied Calculus for the Managerial, Life, and Social Sciences: A Brief Approach
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