Question

QUESTION 18 A drone company builds its own motors, which are then put into each drone. While the drone manufacturing process is continuous, the motors are intermittent flow.. made when needed). Data on the manufacture of the motors appears below. Annual demand (D) - 52,264 units Daily subassembly production rate - 1,000 Setup cost (S) - $85 per batch Daily subassembly usage rate - 200 Carrying cost - $0.20 per unit per year Annual demand 52,264 units daily production rate 1000 unit per day daily subassembly usage rate 200 per day carrying cost $0.20 per unit per year Excel Access To minimize cost, how large should each batch (or lot) of motors be (what is Qp')?

Answer 1

EPQ =(2D*S/[H(1-d/p)])^0.5

D=52264

p=1000

d=200

S=85

H=0.2

EPQ= (2*52264*85/(0.2*(1-200/1000)))^0.5

EPQ= 7451.88

So the lot should be of 7451.88 units