Good Stuff Essay

Submitted By moemagidy

Words: 388

Pages: 2

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.Three stations are required for production: * Stuffing station. $90,000/machine. * Testing station. $80,000/machine. * Tuning station. $100,000/machine.
1. The salvage price for any of the three machines indicated above is $10, 000, provided that there is at least one machine left in each of the mentioned stations above.
2. An increasing number of machines do not escalate the salary of the operators.
3. Orders arrive at random times; each order contains 60 receivers matched up with 60 raw kits forming a manufacturing lot.
4. Raw kits purchased at a cost of $10 per kit ($600 per order). There is also a fixed cost of $1000 per shipment of raw kits, independent of the shipment size. The supplier requires four days to ship any quantity of raw kits.

5. An order does not leave the factory until all 60 kits in the order are completed. A customer order filled within the quoted lead time of 24 hours earns $1000. If an order is still in the factory 24 hours after it arrived, then a lateness penalty is incurred. Specifically, the total revenue for an order linearly decreases from $1000 for a 24-hour lead time to $0 for the maximum lead time of 72 hours. Orders that take longer than 72 hours to fill generate no revenue at all.
6. The balance earns interest (compounded every simulated day) at a compounded rate of 10% per year.

7. One hour of real time corresponds to 24 hours of simulated time.

8. In the initial months, demand is expected to grow at a roughly

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