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Acme Co. manufactures digital cameras. Demand for the current model is expected to occur at a constant annual rate of 5400 items. One digital camera costs $349. The holding cost is based on a 10% annual rate, and production setup costs are $1200. The manufacturing plant has an annual production capacity of 8900 units. Acme has 275 working days per year, and the lead time for a production run is 2 days. Use the production lot size model to compute the following values: a. Minimum cost production lot size b. Number of production runs per year c. Cycle time d. Length of a production run e. Maximum inventory f. Total annual cost g. Reorder point
You may be having problems but you do not say what your problems are!
You will obviously have an answer in the same book in which you found the question, so ask about whatever it is in the answer that you are not clear about and then I will explain 🙂
However, this question could not possibly be asked in the Paper FM exam. Parts of it could be but not the whole question – it is nothing like what is asked in Paper FM.
You should be using a Revision Kit from one of the ACCA Approved Publishers – they are full of past exam and other exam standard questions that are of the type that are actually asked in the exam 🙂
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