Sketch a graph to depict inventory level against time and

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Frank's machine shop operates 250 days per year. Frank sells 5,000 units per year of his most popular item, a specialty gear. The set-up cost for this gear is £100 and the monthly unit cost of holding inventory is 1% of the production cost per unit, which is £50. The lead time is 10 days. When the gear is being produced, the shop can make 80 gears per day (Hint: You should use the production model for inventory management.)

Complete the following:

How many gears should be produced in each run and at what minimum cost?

What is the cycle time?

Find the reorder point.

Draw a graph to depict inventory level against time and show on it the quantities found above. Also, what is the maximum inventory level?

Reference no: EM13388305

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