Emarpy Appliance is a company that produces all kinds of major appliances. Bud? Banis, the president of? Emarpy, is concerned about the production policy for the? company's best-selling refrigerator. The annual demand for this has been about 7,250 units each? year, and this demand has been constant throughout the year. The production capacity is 205 units per day. Each time production? starts, it costs the company $120 to move materials into? place, reset the assembly? line, and clean the equipment. The holding cost of a refrigerator is $50 per year. The current production plan calls for 410 refrigerators to be produced in each production run. Assume there are 250 working days per year.
a) What is the daily demand of this? product?
?b) If the company were to continue to produce 430 units each time production? starts, how many days would production? continue? What would the annual setup cost? be?
?d) If the current policy? continues, how many refrigerators would be in inventory when production? stops? What would the average inventory level? be?
?e) If the company produces 410 refrigerators at a? time, what would the total annual setup cost and holding cost? be?
?f) If Bud Banis wants to minimize the total annual inventory? cost, how many refrigerators should be produced in each production? run?
How much would this save the company in inventory costs compared to the current policy of producing 410 units in each production? run?