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Carol Cagle has a repetitive manufacturing plant producing trailer hitches in Arlington, Texas. The plant has an average inventory turnover of only 12 times per year. She has therefore determined that she will reduce her component lot sizes. She has developed the following data for one component, the safety chain clip:
Annual demand=34,200 units
Daily demand=120 units
Daily production (in 8 hours)=960 units
Desired lot size (1 hour of production)=120 units
Holding cost per unit per year=$12
Setup labor cost per hour=$21
How many minutes of setup time should she have her plant manager aim for regarding this component?
NOTE: Calculate set-up time: formula 16-2 then set up time calculation. Desired lot size is Qp. Please show all work/steps
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