# Economics

instruction

Assignment
Submission Date
and Time: 16 May, 11:59pm
Value (Weight): 10% of total assessment
Word Length: Word length not applicable owing to the statistical
nature of the assignment.
Learning
Outcome(s): 1-4
Question 1
A company has the option of purchasing or manufacturing an item. If the
item is purchased, the company will be charged \$25 per unit plus \$4 per
order. If the company manufactures the item, it has a production capacity
of 8,000 units per year. It costs \$50 to set up a production run, and annual
demand is 3,000 units per year. If the annual holding cost is 10% and the
cost of manufacturing one unit is \$23, determine whether the company
should purchase or manufacture the item.
Question 2
subsequent sale. The bakery operates 5 days a week, 52 weeks a year and
can produce 62 pies per day. The bakery sets up the pie production
operation and produces until a predetermined number (Q) has been
produced. When not producing pies, the bakery uses its personnel and
facilities for producing other items. The setup cost for a production run of
pies is \$500. The cost of holding frozen pies in storage is \$5.50 per pie per
year. The annual demand for frozen pies, which is constant over time, is
6,000 pies.
Determine the following:
(a) The optimal production run quantity (Q).
(b) The total annual inventory costs.
(c) The optimal number of production runs per year.
(d) The optimal cycle time (time between run starts).
(e) The run length (in working days).
Question 3
The King Olaf Bar buys Old World draft beer by the barrel from a local
distributor. The bar has an annual demand of 900 barrels, which it
purchases at a cost of \$205 per barrel. The annual carrying cost is 12% of
the price, and the cost per order is \$160. The distributor has offered the
bar a reduced price of \$190 per barrel if it will order a minimum of 300
barrels. Should the bar take the discount and if so, what type of saving will
Assessment Rubric:
Performance Indicators
Fail
Less than
50%
Pass
50% to 64%
Credit
65% to 74%
Distinction
75% to 84%
Formulation
and/or
selection of
Numerous
errors in the
models,
Some errors
in the models
or equation
A good level
understanding
of the
A very high
level
understanding
UNE Assessment Rule
Assessments will be marked and feedback provided in line with UNE’s
Assessment Rule and Assessment Procedures. Students should also be aware of
the University guidelines on Academic Integrity including University Rules on
models incorrect
model used
and/or
missing
variable
descriptions
specifications
and/or several
missing
variable
descriptions
question with
a description
missing for
two variables
of the
question with
a description
missing for
one variable
Correctly
solved
problems
Incorrectly
solved model,
wrong Excel
QM module
used when
solving
problem, or
wrong
equation used
The solved
problem has
several errors
present and is
difficult to
follow
The solution
to the
problems
provided are
mostly correct
but there is at
least one
major error
(or two minor
errors)
demonstrate a
high level of
understanding
in the process
of solving the
problems but
a minor error
is present
Explanation
of solved
Inaccurately
communicates
the solution to
the problems
and the
relevant
concepts
Limited
explanation of
the solution to
the problem
and limited
demonstrated
understanding
of the relevant
concepts
Satisfactorily
communicates
an
understanding
of the solution
and the main
concepts
relevant to the
question and
the computed
results
A high level of
understanding
of the key
concepts
relevant to the
question and
computed
results is
demonstrated
Presentation Assignment is
presented in a
manner that
is difficult to
lacks the
elements of a
professional
presented
assignment
Assignment is
difficult to
times and/or
lacks several
of the
attributes
required in a
professionally
presented
assignment
Assignment
has a logical
structure but
lacks several
of the
attributes
required for a
professionally
presented
assignment
Assignment is
presented in a
logical
manner but
lacks a few
minor
attributes of a
professionally
presented
assignment
Academic Misconduct and Plagiarism. Information is available in the Student