Problem 7 A company manufactures vacuum cleaners. Although the company buys many of the components from outside vendors, it produces in-house HEPA filters at the rate of 600 per day. Vacuum cleaners are assembled daily at the rate of 200 per day. The company operates 300 days a year. The setup costs for a production run of the filters is $50 per setup, and the annual holding costs are $1.50 per filter (In US dollars) a How many filters per run are optimal? b What is the average inventory level for this production size? c How many production setups would there be in a year?
Problem 7
A company manufactures vacuum cleaners. Although
the company buys many of the components from outside
vendors, it produces in-house HEPA filters at the rate of
600 per day. Vacuum cleaners are assembled daily at the
rate of 200 per day. The company operates 300 days a
year. The setup costs for a production run of the filters is
$50 per setup, and the annual holding costs are $1.50
per filter (In US dollars)
a How many filters per run are optimal?
b What is the average inventory level for this production size?
c How many production setups would there be in a year?
d What is the optimal length of the production run in days?
e What would be the savings in annual inventory costs if setup
costs can be reduced to $30 per setup?
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