An Introduction to Management Science 13th Edition by David Anderson,Dennis Sweeney ,Thomas Williams ,Jeffrey Camm, Kipp Martin

Exercise 1

A well-known manufacturer of several brands of toothpaste uses the production lot size model to determine production quantities for its various products. The product known as Extra White is currently being produced in production lot sizes of 5000 units. The length of the production run for this quantity is 10 days. Because of a recent shortage of a particular raw material, the supplier of the material announced that a cost increase will be passed along to the manufacturer of Extra White. Current estimates are that the new raw material cost will increase the manufacturing cost of the toothpaste products by 23% per unit. What will be the effect of this price increase on the production lot sizes for Extra White?