- Ross White (see Problem 9) wants to reconsider his decision ofbuying the brackets and is considering making the bracketsin-house. He has determined that setup costs would be $25 inmachinist time and lost production time, and 50 brackets could beproduced in a day once the machine has been set up. Ross estimatesthat the cost (including labor time and materials) of producing onebracket would be $14.80. The holding cost would be 10% of thiscost.
(a) What is the daily demand rate?
(b) What is the optimal productionquantity?
(c) How long will it take to producethe optimal quantity? How much inventory is sold during thistime?
(d) If Ross uses the optimalproduction quantity, what would be the maximum inventory level?What would be the average inventory level? What is the annualholding cost?
(e) How many production runs wouldthere be each year? What would be the annual setup cost?
(f) Given the optimal production runsize, what is the total annual inventory cost?
(g) If the lead time is one-half day,what is the ROP?
