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A company produces plastic powder in lots of 2000 pounds at the beginning of each week....

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General Management

A company produces plastic powder in lots of 2000 pounds at thebeginning of each week. The company uses the powder in an injectionmoulding process at the steady rate of 50 pounds per hour for aneight-hour day, five days a week. The manager has indicated thatthe cost of placing an order is $100, but “we really have notdetermined what the holding cost is”. (1) What weekly holding costrate does the lot size imply, assuming the lot size 2000 isoptimal? (2) Suppose the figure you compute for weekly holding costrate has been shown to the manager, and the manager says that it isnot that high. Would that mean the lot size 2000 is too large ortoo small? Explain in at most two sentences

Answer & Explanation Solved by verified expert
4.1 Ratings (596 Votes)
Weekly demand of powder to be used in an injection moulding process 50 Pounds hour x 8 hours day x 5 days week 2000 pounds per week Therefore Annual demand of powder D 2000 Pounds    See Answer
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