Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 15

The Simple Simon Bakery produces fruit pies for freezing and subsequent sale. The bakery, which operates 5 days per week, 52 weeks per year, can produce pies at the rate of 64 pies per day. The bakery sets up the pie production operation and produces until a predetermined number ( Q ) of pies has been produced. When not producing pies, the bakery uses its personnel and facilities for producing other bakery items. The setup cost for a production run of fruit pies is $500. The cost of holding frozen pies in storage is $5 per pie per year. The annual demand for frozen fruit pies, which is constant over time, is 5,000 pies. Determine the following:
a. The optimal production run quantity ( Q )
b. The total annual inventory costs
c. The optimal number of production runs per year
d. The optimal cycle time (time between run starts)
e. The run length, in working days