Question

15. A plant purchases components that are then combined into subassemblies. The subassemblies are produced in batches and stored until customers place orders. The subassemblies are then quickly combined into finished, customized products For on particular subassembly, parts cost $50, and $12 is added during subassembly Holding cost for the facility is 40% per year, and annual demand for subassemblies is 14,500. Each set-up costs $125 Processing time is 1 hour per subassembly, and batches spend approximately two-thirds of total time waiting at machines or for

only set problem, do not need to solve.

Answer 1

The question is like :-

A plant purchases components that are then combined into sub assemblies. The sub assemblies are produced into batches and stored until customers place orders. The subassemblies are then quickly combined into finished and customized products .

For an particular subassembly , their individual cost is given as

parts cost $50

and $ 12 is added during subassembly .

Holding cost for the facility is 40% per year , and annual demand for subassemblies is 14500

Each setup cost $ 125

Processing time is 1hr per subassembly and batches spend aprrox 2/3 rd of total time waiting at machines or for material handling .

The question is asking to find the optimal batch size for making the subassemblies .

relevant assunptions are also given .

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