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  3. a company has a production at a rate of 200 units

A company has a production at a rate of 200 units per day. 80 units will...

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General Management

  1. A company has a production at a rate of 200 units per day. 80units will be sold daily. The production will take place five daysa week, 48 weeks a year. It usually takes a full day to get themachine ready for another production run, at a cost of $300.Inventory holding costs will be $10 a year. (calculate to2 decimalplaces)

a. What is the optional run size andlowest annual cost for carrying and setup?

b. What are the cycle time and runtime for the optimal run quantity?

c. If the company wants to run anotherproduction for a new product between runs of this item, and needs aminimum of 10 days per cycle for the other work, will there beenough time?

Answer & Explanation Solved by verified expert
4.3 Ratings (871 Votes)
a Total Annual Demand 80 5 48 19200 units Daily production rate 200 units Daily consumption rate 80 units Setup Cost 300 Inventory carrying cost 10 Economic Batch Quantity EBQ sqrt2 Demand Setup cost Inventory carrying cost 1 daily conumption rate daily production rate Economic Batch Quantity EBQ sqrt 2 19200 300 10 1 80200 Economic Batch Quantity EBQ 138564 1386    See Answer
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