Determine the impact on batch size-batch throughput time

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Reference no: EM131785081

A production center is used to manufacture several similar part types. Each set-up costs $150 and takes 3 hours. Economic Manufactured Quantity (EMQ) model is employed to decide the batch size. Processing time is deterministic with a capacity of 4,000 units per year. Production batches flow through the system with only minimal waiting time. Demand occurs at a constant rate of 1,000 units per year. The carrying cost rate is 40%/year and the raw material cost per item is $10. The production center is charged out at $30 per hour, including labor and the machining time is 60 minutes. Determine the impact on batch size, batch throughput time, number of set-ups, and total relevant inventory cost for a 30% reduction in set-up time and cost. The plant operated 2400 hours per year.

Reference no: EM131785081

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