Minimize the annual cost of the inventory system

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Reference no: EM132147688

Ashlee's Beach Chairs Company produces upscale beach chairs. Annual demand for the chairs is estimated at 1,000 units. The frames are made in batches before the final assembly process. Ashlee's final assembly department needs frames at a rate of 20 per week. Ashlee's frame department can produce 25 frames per week. The setup cost is $100/setup, the annual holding cost per frame is $4, and the cost of production $30 a frame. The company operates 50 weeks per year. Set up an optimum inventory system for Ashlee that would minimize the annual cost of the inventory system. Find the following:

a. Production quantity (Q)

b. Number of production runs

c. Length of production run (tp)

d. Peak inventory

e. Average inventory

f. Idle time (ti)

g. Cycle time

h. Number of cycles

i. Total annual inventory cost (T)

j. Total annual cost of the system (TS)

Reference no: EM132147688

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