Race One Motors is an Indonesian car manufacturer. At its largest manufacturing
ID: 468999 • Letter: R
Question
Race One Motors is an Indonesian car manufacturer. At its largest manufacturing facility, in Jakarta, the company produces subcomponents at a rate of 315 per day. and it uses these subcomponents at a -ate of 12, 330 per year (of 253 working days). Holding costs are $3 per item per year, and ordering costs are S31 per order What s the economic production quantity? 548 87 units (round your response to two decimal places). How many production runs per year will be made? production runs (round your response lo two decimal places).Explanation / Answer
Demand = D = 12,300
Holding cost = Ch = $3
p = annual production capacity = per day production capacity*number of days = 315*250 = 78,750
Ordering cost = Co = $31
a. Economic production quantity = (2*D*Co/Ch)^1/2*(p/p-D)^1/2
= (2*12300*31/3)^1/2 * (78750/78750-12300)^1/2
= 504.18*1.09
= 548.87
b. Number of production runs = D/economic production quantity
= 12,300/548.87
= 22.41
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