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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?

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
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...
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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
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