Reference no: EM133003315

Question - A company makes refrigerators and stoves. The manufacturer has realized that producing refrigerators generates high costs, so it has asked the operations manager to determine how many and when to produce, in order to satisfy an annual demand of 6,000 units, incurring the minimum cost. To start a production batch, a week is necessary in order to organize the works and the machinery. The production rate is 800 units per month. The cost of organizing a production batch is US $ 1,000, which covers the cost of preparing the equipment, the salary of the workers, etc. Each refrigerator is sold for US $ 250 and keeping a unit in inventory is equivalent to 2% of the price of the product.

a) Obtain the optimal amount of production.

b) Calculate the number of production runs, production time, consumption time and cycle time.

c) Obtain the maximum inventory and average inventory.

d) Obtain the reorder point. Indicate what period it is in (consumption or production and consumption).

e) Calculate the total cost.