A widget manufacturer builds widgets and sells them direct, Ask an Expert

Management Studies

A widget manufacturer builds widgets and sells them direct to customers online. The production manager wishes to optimize the inventory costs. The annual demand for widgets is 3,600 and the plant works 240 days per year. The plant can produce widgets at a rate of 20 per day. The cost to prepare the equipment to start a production run is $5 and the annual inventory carrying cost is $0.90 per year.

1. What should be the optimum quantity of widgets to produce?

2. What is the maximum inventory achieved during a production run?

3. How many production runs are needed to meet the annual demand?

4. What is the average inventory of widgets?

5. What is the total annual cost of producing and storing the company’s widgets?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M93099195

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