HAL Ltd. produces a line of high-capacity disk drives for computers. The housings for the drives are produced in Hamilton, Ontario at a rate of 250 housings per month, and shipped to the main plant in Toronto. The housings cost HAL $100 each to produce, and the setup cost for beginning a production run is $500. HAL uses the drive housings at a fairly steady rate of 1400 per year. Assume an annual interest rate of 25% for determining the holding cost. What is the optimal number of housings for HAL to produce in each production run? For the optimal production size, what proportion of each production cycle consists of uptime and what proportion consists of downtime? Assuming that HAL produces the optimal number of housings in each production run, what is the maximum on-hand inventory level of these housings? What is the annual cost of holding and setup?
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
HAL Ltd. produces a line of high-capacity disk drives for computers. The housings for the drives are produced in Hamilton, Ontario at a rate of 250 housings per month, and shipped to the main plant in Toronto. The housings cost HAL $100 each to produce, and the setup cost for beginning a production run is $500. HAL uses the drive housings at a fairly steady rate of 1400 per year. Assume an annual interest rate of 25% for determining the holding cost.
- What is the optimal number of housings for HAL to produce in each production run?
- For the optimal production size, what proportion of each production cycle consists of uptime and what proportion consists of downtime?
- Assuming that HAL produces the optimal number of housings in each production run, what is the maximum on-hand inventory level of these housings? What is the annual cost of holding and setup?
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