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A local manufacturing company makes solar flashing lights for toys. The company operates its production facility 240 days per year. It has orders for about 12,000 solar flashing lights per year and has the capability of producing 100 per day. Setting up the light production costs $75 per setup. The cost of each light is $1. The holding cost is $0.10 per light per year.
a. What is the optimal size of the production run?
b. What is the maximum number of solar flashing lights that will be in inventory at the manufacturing facility? How many production runs per year will be made?
c. What is the average holding cost per year? What is the average setup cost per year? What is the total cost per year, including the cost of the lights?
d. What is the length of the production run in days? Calculate days of demand that are satisfied by each production run. What percentage of time will the facility be producing solar flashing lights?
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