Sharpe Cutter is a small company that produces specialty knives for paper cutting machinery. The annual...
Sharpe Cutter is a small company that produces specialty knives for paper cutting machinery. The annual demand for a particular type of knife is 100,000 units. The demand is uniform over the 250 working days in a year. Sharpe Cutter produces this type of knife in lots and, on average, can produce 500 knives a day. The cost to set up a production lot is $320, and the annual holding cost is $1.30 per knife.
a. Determine the economic production lot size (ELS).
The economic production lot size is 15689 knives. (Enter your response rounded to the nearest whole number.)
b. Determine the total annual setup and inventory holding cost for this item.
The total annual setup and inventory holding cost is 4079.35
(Enter your response rounded to two decimal places.)
c. Determine the TBO, or cycle length, for the ELS.
The cycle length is _____days. (Enter your response rounded to the nearest whole number.)
Homework Answers
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.
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Sharpe Cutter is a small company that produces specialty knives
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