4) Paul and Paul Jr from Orange County Choppers are scheduling their shop demand
ID: 367797 • Letter: 4
Question
4) Paul and Paul Jr from Orange County Choppers are scheduling their shop demand for handle bars. A handle bar has a unit purchase cost of S100, an ordering cost per order of S200, and a holding cost fraction per period of .02. Determine the lot sizes by the incremental part-period algorithm from the data below: Period Demand (units) 4 60 100 10 xx-first two digits of student number. YY = last two digits of student number. Provide the ordering schedule and cumulative variable costs in a table format just like seen in class.Explanation / Answer
a) Total cost of material handling is the Depreciable amount of the conveyor. This is because the conveyor will handle the materials in its useful lide and so its depreciable amount will be the cost of material handling.
Purchase cost = Length x Price per foot
= 1,200 x $25
= $30,000
Salvage value = 10% of purchase cost = 10% of $30,000 = $3,000
Installation cost = 30% of purchase cost
= 30% of $30,000 = $9,000
Now, Total depreciable amount = Purchase cost + Installation cost - Salvage value
= $30,000 + $9,000 - $3,000
= $36,000
So, $36,000 is the total cost of material handling
b)
Annual Depreciation = Depreciable amount / Service life
= $36,000 / 15
= $2,400 per year
c)
Total production per year = Units produced per day x Number of days
= 300 x 350 days
= 105,000 units
Materials handling cost per unit per year
= Depreciation per year / Units produced per year
= $2,400 / 105,000
= $0.023 per unit per year
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