Arthur Meiners is the production manager of Wheel-Rite, a small producer of meta
ID: 326175 • Letter: A
Question
Arthur Meiners is the production manager of Wheel-Rite, a small producer of metal parts. Wheel-Rite supplies Cal-Tex, a larger assembly company, with 10,200 wheel bearings each year. This order has been stable for some time. Setup cost for Wheel-Rite is $41, and holding cost is $0.40 per wheel bearing per year. Wheel-Rite can produce 450 wheel bearings per day. Cal-Tex is a just-in-time manufacturer and requires that 50 bearings be shipped to it each business day.
a) What is the optimum production quantity? __ units (round your response to the nearest whole number).
b) What is the maximum number of wheel bearings that will be in inventory at Wheel-Rite?_______ units (round your response to the nearest whole number)
c)How many production runs of wheel bearings will Wheel-Rite have in a year?_______runs (round your response to two decimal places)
d)What is the toal setup plus holding cost for Wheel-Rite? $________ (round your response to two decimal places)
Explanation / Answer
Given are following data :
Annual demand = D = 10200 wheel bearing
Daily demand = d = 50
Daily production = p = 450
Set up cost = Cs = $ 41
Annual unit holding cost = Ch = $0.40
= Square root ( 2 x Cs x D / Ch )
= Square root ( 2 x 41 x 10200 / 0.40 x ( 1 - 50/450 ) )
= Square root ( 2 x 41 x 10200 / 0.40 x 0.888)
= 1534.51 ( 1535 rounded to nearest whole number )
OPTIMUM PRODUCTION QUANTITY = 1535 WHEEL BEARING
= Optimum production quantity x ( 1 – d/p)
= 1535 x ( 1 – 50/450)
= 1535 x 0.888
= 1363.08 ( 1363 rounding to nearest whole number )
MAXIMUM NUMBER OF WHEEL BEARING IN INVENTORY = 1363
= Annual demand / Optimum production quantity
= 10200/ 1535
= 6.64
NUMBER OF PRODUCTION RUNS WHEEL BEARING WILL WHEEL RITE HAVE IN A YEAR = 6.64
= Annual unit holding cost x Average inventory
= Ch x Maximum inventory / 2
= $0.40 x 1363/2
= $272.6
Annual set up cost
= Unit set up cost x Number of set ups
= Cs x Annual demand / Optimum production quantity
= Cs x 10200/ 1535
= 41 x 10200/1535
= $272.44
Thus, totalset up plus holding cost = $272.60 + $272.44 = $545.04
TOTAL SET UP PLUS HOLDING COST = $ 545.04
OPTIMUM PRODUCTION QUANTITY = 1535 WHEEL BEARING
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.