A toy manufacturer makes its wind-up motors, which are then put into its toys. While the toy manufacturing process is continuous, the motors are intermittent flow. Data on the manufacture of the motors appears below. (a) To minimize cost, how large should each batch of subassemblies be? (b) What is the total annual inventory cost (holding plus setup) of the optimal behavior in this problem?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
icon
Related questions
Question

A toy manufacturer makes its wind-up motors, which are then put into its toys. While the toy manufacturing process is continuous, the motors are intermittent flow. Data on the manufacture of the motors appears below.

(a) To minimize cost, how large should each batch of subassemblies be?

(b) What is the total annual inventory cost (holding plus setup) of the optimal behavior in this problem?

 

Annual demand (D) = 25,000 units
Setup cost (S) = $85 per batch
Carrying cost = $2.00 per unit per year
Daily subassembly production rate = 1,000
Daily subassembly usage rate = 400
Transcribed Image Text:Annual demand (D) = 25,000 units Setup cost (S) = $85 per batch Carrying cost = $2.00 per unit per year Daily subassembly production rate = 1,000 Daily subassembly usage rate = 400
Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Similar questions
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Business in Action
Business in Action
Operations Management
ISBN:
9780135198100
Author:
BOVEE
Publisher:
PEARSON CO
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.