Radovilsky Manufacturing Company, in Hayward. California. makes flashing lights

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 105 per day. Setting up the light production costs $49. The cost of each light is $0.95 The holding cost is $0.05 per light per year.

a) What is the optimal sizeof the production rn?

b) What is the average holding cost per year?

c) What is the average setup cot per year?

d) What is the total cost per year, including the cost of the lights?

Please calculate the following

Explanation / Answer

The optimal point is when your annual setup cost (D/Q)S equals your annual holding cost (Q/2)H
Q H / 2 = D S / Q
Q^2 H = 2 D S
Q^2 = 2 D S / H
Q* = sqrt(2 D S / H)

This we can solve directly.

Q* = sqrt(2 (12400) (51) / 0.05)
Q* = sqrt(25296000)
Q* = 5029.5

Let's check. Are those costs about equal?

The annual setup cost is (D/Q) S
(12400 / 5030) * 51 => $125.73

The annual holding cost is (Q/2) H
(5030 / 2) * 0.05 => $125.75

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.