Radovilsky Manufacturing Company, in Hayward. California. makes flashing lights
ID: 327232 • Letter: R
Question
Radovilsky Manufacturing Company, in Hayward. California. makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders fo about 12,000 flashing lights per year and hasthe capability of producing 100 per day. Setting up the light production costs $50. The cost of each light is $1 The holding cost is $0.10 per light per year.
Q. 1. How many production runs will there be per year?
2. What is the length of each production run?
3. What percentage of time will the facility be producing light bulbs?
Explanation / Answer
Given are the following data :
Demand for flashing lights = D = 12000
Daily demand = d = 12000 / 300 days = 40
Daily production = p = 100
Set up cost for light production = Cs = $50
Holding cost = Ch = $0.10 per light per year
Therefore , Economic Production Quantity ( EPQ )
= Square root ( 2 x Cs x D /Ch x ( 1 – d/p))
= Square root ( 2 x 50 x 12000 / 0.10 x ( 1 – 40/100))
= Square root ( 2 x 50 x 12000 / 0.10 x 0.60)
=4472.13 ( 4472 rounded to nearest whole number )
Answer to Q,1:
Number of production runs per year = Annual demand / EPQ = 12000/ 4472 = 2.683
Answer to Q.2 :
Length of each production run = EPQ/ Daily production = 4472 / 100 = 4472/100 = 44.72 days
Answer to Q.3 :
Number of days production required to cater to annual requirement
= annual demand / daily production
= 12000/ 100
= 120
Percentage of time the facility will be producing light bulbs
= Number of days of production in a year / Total number of days in a year ( i.e. 300 days ) x 100
= 120/300 x 100
= 40%
PERCENTAGE OF TIME FACILITY WILL BE PRODUCING LIGHT BULBS = 40%
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