Question

The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. At what point should resin be reordered?

a.0 kilograms remaining
b.50 kilograms remaining
c.200 kilograms remaining
d.400 kilograms remaining
e.500 kilograms remaining

Answer 1

200 kilogram remaining

Explanation:

Manufacturing uses resin = 50 kilograms per day

Cost per day = $0.04

Costs for resin per order= $100

Resin in reorder = use resin * cost pr day * resin per order

= 50*0.04*100

= 200 kilograms remaining