What is the optimal production quantity

Assignment Help Business Management

Reference no: EM133395975

Case Study: Ross White's machine shop uses 2,500 brackets during the course of a year, and this usage is relatively constant throughout the year.
These brackets are purchased from a supplier 100 miles away for $15 each, and the lead time is 2 days. The holding cost per bracket per
year is $1.50 (or 10% of the unit cost), and the ordering cost per order is $18.75. There are 250 working days per year.

6-28 Ross White (see Problem 6-27) wants to reconsider his decision of buying the brackets and is considering making the brackets in-house.
He has determined that setup cost would be $25 in machinist time and lost production time and that 50 brackets could be produced in a day
once the machine has been set up. Ross estimates that the cost (including labor time and materials) of producing one bracket would be $14.80. The holding cost would be 10% of this cost.

Questions

(a) What is the daily demand rate?

(b) What is the optimal production quantity?

(d) If Ross uses the optimal production quantity, what would be the maximum inventory level? What would be the average inventory level? What is the annual holding cost?

(e) How many production runs would there be each year? What would be the annual setup cost?

(f) Given the optimal production run size, what is the total annual inventory cost?

(g) If the lead time is one-half day, what is the ROP?

Reference no: EM133395975

Questions Cloud

Are these flood mitigation techniques rival or non-rival : Are these flood mitigation techniques rival or non-rival and Are these flood mitigation techniques excludable or non-excludable

Describe an example of a paracrisis situation : Explain paracrisis and how/where it fits into the three phases of crisis management; and Describe an example of a paracrisis situation.

Three instrumental values that drive my ambition : What are the one or two terminal values and two or three instrumental values that drive my ambition?

Whats the total producer surplus in this market : Two electronic stores are willing to sell the dell computers for as little as 1,050 and 1,150 each. Whats the total producer surplus in this market

What is the optimal production quantity : What is the daily demand rate? What is the optimal production quantity? How long will it take to produce the optimal quantity? How much inventory

Assess the value of multiculturalism : Build out a case analysis on the topic of strategic management and why it is critical to the success of an organization in meeting its goals and mission.

Explain the concepts of person job : Explain the concepts of person job and person organization fit. When you are looking for a new job what will be a deal breaker for you money location prestige b

Explain why the intersection of the degree line : Explain why the intersection of the degree line and the AE function represents equilibrium by appealing to the difference between actual and desired

Predict that the equilibrium market price will fall : Determine whether the statement is true or false and justify your answer. If you make a claim without support, no credit will be awarded

User Account

All Pages