Emarpy spend annually on setup cost-inventory holding cost

Assignment Help Operation Management

Reference no: EM132286467

Emarpy Appliance is a company that produces all kinds of major appliances. Bud Banis, the president of Emarpy, is concerned about the production policy for the company’s best-selling refrigerator. The annual demand has been about 8,000 units each year, and this demand has been constant throughout the year.

The production capacity is 200 units per day.

Each time production starts, it costs the company $120 to move materials into place, reset the assembly line, and clean the equipment. (Hint: this is the setup cost.)

The holding cost of a refrigerator is $50 per year (Hint: this is H. No need to calculate i*C).

Assume there are 250 working days per year. (Hint: use this information to either change production capacity to annual capacity, or annual demand to daily demand)

(a) If Bud Banis wants to minimize the total annual inventory cost, how many refrigerators should be produced in each production run? (Hint: total annual inventory cost is the Total Relevant Cost, which is the cost associated with ordering (setup) and holding inventory).

(b) What is the average inventory that Emarpy will carry?

(d) If the current plan is to produce 400 refrigerators in a batch, is that the best plan, or can you provide a better plan?

Reference no: EM132286467

Questions Cloud

How the concepts are used in production environment : List and discuss the five objectives and share any research with your peers. Focus on how the concepts are used in a production environment

Demographic changes can influence employment relationship : Briefly discuss how workforce demographic changes can influence the employment relationship.

Analyze the opportunities for strategic change : Analyze the opportunities for strategic change that are evident, citing evidence.

Discuss consumer driven health care plans : Briefly discuss consumer driven health care plans. Discuss the controversies related with cash balance retirement plans.

Emarpy spend annually on setup cost-inventory holding cost : Emarpy Appliance is a company that produces all kinds of major appliances. How much will Emarpy spend annually on setup cost and inventory holding cost

Disabilities recognized under workers compensation laws : Briefly discuss the types of disabilities recognized under workers' compensation laws.

Regardless of number of different type of products in order : Regardless of the number of different type of products in an order, a fixed transportation cost of $4,000 is incurred each time an order is delivered.

Create a pie chart and a pareto chart : MAT 152 Signature Assignment - Using SPSS, For the qualitative data - Create a pie chart and a Pareto chart and Create a frequency table

Implementing capacity management system from health care : Implementing a Capacity Management System from Health care Information Systems. Discuss what you think should serve on the project steering committee.

User Account

All Pages