Question 8: Total cost functions for Processes X, Y, and Z:
TC(X) = 1200 + 35Q,
TC(Y) = 1000 + 42Q,
TC(Z) = 1500 + 30Q
Determine all crossover points and identify the output ranges where each production process should be used.
Op* = √(2DSH[1-(d/p)])
Question Formula:
Given:
Holding cost = $0.05/unit/day
Set-up cost = $5/set up
Production rate = 6 units/d * a * y
Annual Demand = 730 units
Determine the production order quantity and the length of the production phase. (1 year = 365 days)