QUESTION 13 1. A toy manufacturer makes its own wind-up motors, which are then p
ID: 406555 • Letter: Q
Question
QUESTION 13
1. A toy manufacturer makes its own wind-up motors, which are then put into its toys. While the toy manufacturing process is continuous, the motors are intermittent flow. Data on the manufacture of the motors appears below.
Annual demand (D) = 50,000 units Daily subassembly production rate = 1,000
Setup cost (S) = $85 per batch Daily subassembly usage rate = 200
Carrying cost = $.20 per unit per year
What is the average inventory for this problem?
20 points
QUESTION 14
1. A toy manufacturer makes its own wind-up motors, which are then put into its toys. While the toy manufacturing process is continuous, the motors are intermittent flow. Data on the manufacture of the motors appears below.
Annual demand (D) = 50,000 units Daily subassembly production rate = 1,000
Setup cost (S) = $85 per batch Daily subassembly usage rate = 200
Carrying cost = $.20 per unit per year
What is the total annual inventory cost (holding plus setup) of the optimal behavior in this problem?
Explanation / Answer
1) The Economic order quantity
EOQ =
D = 50,000 units
C0 = $85 per batch
Ch = $.20 per unit per year
EOQ = 652 units
Average Inventory = EOQ /2
Average Inventory = 326 units
2) The total annual inventory cost = Setup cost (S) + Carrying cost
No of setups per year = Annual demand / Economic Order size
No of setups per year = 50,000 / 652
No of setups per year = 76.68
Setup cost = 76.68 X $ 85 per batch
Setup cost = $ 6,518.40
Carrying cost = cost of carrying one unit X average inventory
Carrying cost = $ 20 X 326 units
Carrying cost = $ 6,520
Total cost = $ 6,518.40 + $ 6,520
Total cost = $ 13,038.40
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.