Please answer 1 and 2 entirely or none at all! Please answer within 30 minutes 1

Question

Please answer 1 and 2 entirely or none at all! Please answer within 30 minutes

1. Carl's Custom Cans produces small containers which are purchased by candy and snack food producers. The production facility operates 300 days per year and has annual demand of 15,000 units for one of its custom cans. They can produce up to 100 of these cans each day. It costs $36 to set up one of their production lines to run this can. (Carl pays $12 per hour for setup labor.) The cost of each can is $1 and annual holding costs are $0.75 per can.

a.What is the optimal size of the production run for this can? (Display your answer to the nearest whole number.)

b.Given your answer to the previous question, how many production runs will be required each year in order to meet the annual demand? (Display your answer up to the nearest whole number.)

c.Suppose the customer for this custom can wants to purchase in quantities of 500 units. What is the required setup cost to make this order quantity an optimal production run quantity for Carl's Custom Cans? (Display your answer to twodecimal places.)

d.Based on your answer to the previous question (reduced setup cost), how long (in minutes) should it take to set up this production line? (Display your answer to twodecimal places.)

2. Bob's Bumpers has a repetitive manufacturing facility in Kentucky that makes automobile bumpers and other auto body parts. The facility operates 300 days per year and has annual demand of 55,000 bumpers. They can produce up to 320 bumpers each day. It costs $53 to set up the production line to produce bumpers. The cost of each bumper is $95 and annual holding costs are $25 per unit. Setup labor cost is $23 per hour.

a.Based on the above information, what is the optimal size of the production run for bumpers? (Display your answer to two decimal places.)

b.Based on your answer to the previous question, and assuming the manufacturer holds no safety stock, what would be the average inventory for these bumpers? (Display your answer to two decimal places.)

c.Based on your answer two questions back, how many production runs would be required each year to satisfy demand? (Display your answer to two decimal places.)

d.Suppose the customer (an auto manufacturer) wants to purchase these bumpers in lots of 200 and that Bob's Bumpers is able to reduce setup costs to the point where 200 is now the optimal production run quantity. How much will they save in annual holding costs with this new lower production quantity? (Display your answer to twodecimal places.)

e.How much will they save in annual setup costs with this new lower production quantity? (Display your answer to two decimal places.)

Explanation / Answer

Annual demand, D = 15,000 units

Demand rate, d = 15000/300 = 50 units per day

Production rate, p = 100 units per day

Setup cost, S = 36

Holding cost, H = 0.75

a) Optimal size of production run = (2DS/(H*(1-d/p)) = (2*36*15000/(0.75*(1-50/100))) = 1697

b) Production runs per year = D/Q = 15000/1697 = 8.84 ~ 9 (rounded off)

c) Desired production run size = (2DS/(H*(1-d/p)) = 500

Required setup cost, S = 5002*0.75*(1-50/100)/(2*15000) = $ 3.125 per setup

d) Time required for production setup = required setup cost / labor cost per hour = 3.125/12 = 0.26 hour or 15.63 minutes

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