What is optimal cycle time and the optimal batch quantities

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Reference no: EM133412581

Case Study: An automotive stamping production area consists of the press and welding assembly. The press operation produces part A and part B in batches. The welding operation assembles 3 parts of part A and 2 parts of part B into automotive body components. The area manager wants to determine the optimal cycle time and batch sizes for the press operation such that the cycle time (i.e., the time between two production runs of the same product) must be the same for parts A and B. The hourly production rate of the press is 1200 parts per hour for part A and 800 parts per hour for part B. The hourly production rate for welding assembly is 100 parts per hour, e.g., the hourly demand for part A is 300 and the hourly demand for part B is 200. The press requires 3 hours of die changeover time to produce part A and 2 hours of die changeover time for part B. The order setup costs are $19.6 for part A and $14 for part B. The cost of part A is $87.6, and the cost of part B is $175.2. The company uses a 20% annual rate (assume 8760 hours in a year).
(Hint: since many of the parameters are given in hourly units, it will be most convenient to stick with the hourly units and convert the holding cost to an hourly cost.)

Questions:
(a) For the press operation, what is the optimal cycle time and the optimal batch quantities for products A and B?

(b) What would be the optimal cycle time and batch quantities for the press operation if the company is able to reduce the changeover times to 1 hour for each of the parts?

Reference no: EM133412581

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