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A textile manufacturer is interested in optimally determined inventories for cutting operations for a children's product line. The production manager would like to establish the optimal reorder point and order quantity for each item in the line. Garment 78A201, a typical product, is demanded uniformly throughout the year; total annual demand is 14,000 items. The production rate is 2,000 items/ month. Sewing, the operation following cutting, is staffed to meet annual demand exactly. Setup costs for cutting are $240, and the cost of carrying one item for a year is $.50. Since cutting and sewing are done in the same plant, delivery of cut items to sewing is essentially instantaneous. Determine the cutting operation operating doctrine for garment 78A201.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M938729

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