Determine the maximum on-hand inventory

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Reference no: EM131716619

Hourly demand: 70 items

Maximum production rate: (850/3) items/hr.

Production cost: $1.00 per item

Hourly holding cost: $0.10 per item

Set-up cost: $270.00

A company producesan item. Assume that shortages are not allowed, and the round-robin ELSP conditions apply. After ?nishing a production run of items, it takes 10 minutes to set-up the machine for the next item. Assume the machine is either setting up, processing at maximum rate, or idle.

(a) On a single diagram, plot and label the optimal inventory trajectories as a function of time.

(b) How many items should be produced during each production run?

(d) Determine the optimal number of production runs, on average, each hour.

(e) Determine the optimal total hourly cost.

(f) Determine the average fraction of time the machine will spend idle.

Using the EPQ model, and assuming another machine is added to produce more items at the same rate & prices as above:

(g) On separate graphs, plot and label optimal inventory trajectories as a function of time.

(h) Determine the optimal average hourly cost.

(i) Describe how to achieve this combined average hourly cost on a single machine. If it isn't possible, explain.

Reference no: EM131716619

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