Assignment:
Suppose you are the supplier of the Cover-up Drapery Company described in problem. It costs $2000 each time you change over your fabric-producing machine from one type to another (1, 2, 3, or 4). Assume that your carrying cost is 30 percent and the other data are as given in problem.
a. What lot sizes would the supplier of carpet prefer to make for types 1, 2, 3, and 4?
b. How would you reconcile the lot sizes that the supplier would like to produce and those that the Cover-up Drapery Company would like to buy? Describe several ways in which these two differing lot sizes can be reconciled.