Question

Problem 16.1 : Question Help Carol Cagle has a repetitive manufacturing plant producing trailer hitches in Arlington, Texas. The plant has an average inventory turnover of only 12 times per year. He has therefore determined that he will reduce his component lot sizes. He has developed the following data for one component, the safety chain clip Setup labor cost $30 per hour Annual holding cost $14 per unit Daily production 960 units/8 hour day Annual demand 33,000 (275 days each x daily demand of 120 units) Desired lot size 120 units (one hour of production) To obtain the desired lot size, the set-up time that should be achieved = minutes (round your response to two decimal places).

Answer 1

Economic Production Quantity is the number of unit that is added to the inventory which minimize the total inventory cost. It maintain a balance between ordering costs and carrying costs.

H = $14 / unit /year p = 960 waits day D = 33000 writs d = 120 units/day 8 = 120 units a sa (120)2 x 14 x (la 120 960) 2 x 33000 - $ 2.67/set up Set-up time = Setup cost Setup labor cost $ 2:67 $30 per hour 2.61 x 60 min 30 A 15.34 minutes Auswer