# If the company produces 400 refrigerators at a time, what would the total annual setup cost and holding cost be?

July 15, 2019
###### •As the accountant, you are asked to provide data on salaries for the staff members (from receptionist to CEO). Would the mean salary be the best representation of this data, please explain?
July 15, 2019

Emarpy Appliance produces all kinds of major appliances.
Richard Feehan, the president of Emarpy, is concerned about the production
policy for the company’s best selling refrigerator. The demand for this has
been relatively constant at about 8,000 units each year. The production
capacity for this product is 200 units per day. Each time production starts, it
costs the company \$120 to move materials into place, reset the assembly line,
and clean the equipment. The holding cost of a refrigerator is \$50 per year.
The current production plan calls for 400 refrigerators to be produced in each
production run. Assume there are 250 working days per year.
(a) What is the daily demand of this product?
(b) If the company were to continue to produce 400 units each
time production starts, how many days would production continue?
(c) Under the current
policy, how many production runs per year would be required? What would the
annual setup cost be?
(d) If the current policy continues, how many refrigerators
would be in inventory when production stops? What would the average inventory
level be?
(e) If the company produces 400 refrigerators at a time, what
would the total annual setup cost and holding cost be?

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If the company produces 400 refrigerators at a time, what would the total annual setup cost and holding cost be? was first posted on July 15, 2019 at 5:31 am.