A toy manufacturer makes its own wind-up motors, which are then put into its toys. While the toy manufacturing process is continuous, the motors are intermittent flow. Data on the manufacture of the motors appears below
Annual demand (D) = 50,000 units Daily subassembly production rate = 1,000
Setup cost (S) = $85 per batch Daily subassembly usage rate = 200
Carrying cost = $.20 per unit per year
(a) To minimize cost, how large should each batch of subassemblies be?
(b) Approximately how many days are required to produce a batch?
(c) How long is a complete cycle?
(d) What is the average inventory for this problem?
(e) What is the total annual inventory cost (holding plus setup) of the optimal behavior in this problem?
(a) Q*p = = 7288.7 or 7289 units.
(b) It will take approximately 7289/1000 = 7.3 days to make these units.
(c) A complete cycle will last approximately 7289 / 200 = 36.445 days.
(d) The maximum inventory level is Q = 7288.7 = 5831 units.
Average inventory is 5831 /2 = 2,915 (not one-half of 7283 ).
(e) Total inventory management costs are
TC = ($85 ) + ($0.20 ) = $583.09 + $583.09 + $1,166.19
You might also like to view...
In comparing the performance of seasonal retailers, the same time periods (such as the fourth quarter of 2011 and the fourth quarter of 2010) should be used
Indicate whether the statement is true or false
If a project is expected to be completed in 68 days with a project variance of 9 days, what is the probability that the project will be completed within 50 days?
a. 0% b. between 5% and 10% c. between 15% and 30% d. over 35%
Restitution is limited to rescission cases
Indicate whether the statement is true or false
If A and B are two independent events with P(A) = 0.20 and P(B) = 0.60, then P(A and B) = 0.80
a. True b. False Indicate whether the statement is true or false