2 1. A well known manufacturer of several brand of toothpaste uses a production lot size model to determine
3 production quatities for its various products. The product known as Extra White is currently being prouced
4 in production lot sizes of 5000 units. The length of production run for this quantity is 10 days. Because of the recent
5 shortage of a particular raw material, the supplier of the material announced that a cost increase will be passed
6 along to the manufacture of Extra White. Current estimates arethat the new raw material cost will increase the
7 manufacturing cost of the toothpaste products by 23% per unit. What will be the effect of this price increase
3 on the production lot sizes for Extra White?
It refers to the wrong concept,because they don’t know the facts?