Question

Rick Wing has a repetitive manufacturing plant producing automobile steering wheels. Use the following data to prepare for a reduced lot size. The firm uses year of 290 days. Setup labor cost $40.00 per hour Annual holding cost $15 per unit Daily production (8 hours) 800 units/day Annual demand for steering wheels 34,800 (290 days x daily demand of 120 units) Desired lot size (2 hours of production) Q = 200 units a) Setup cost = $ (round your response to two decimal places).

Answer 1

The data given here:

1: Annual demand (D)= 34800 units

2: daily demand (d) = 120 units

3: daily production (p) = 800 units per day

4: holding cost (H) = $15 per unit

5: desired lot size (Q) = 200 units

By using the formula below we find the setup cost = $ 7.32

The data - given D = Actual demand d=daily - 34,800 unite demand 120 units Set up cost $40 per hour P = daily production soo unite / day H holding cost = $15 per unit desired lot size 200 unite 2DS EP Q = ? VH(1-d). 2DS q Hind) q²Hci-d) s=(200)2 x 15%( 1 - 1200) 2D 2x 34800 2000 200 x 15× 680 2 x 34800 x 800 s =$7.3275 5 =$1.32