The cost to set up for producing a standard component is, Ask an Expert

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The cost to set up for producing a standard component is approximately $200. Once set up they can produce at a rate of approximately 500 units/month (6,000 units per year) at a cost of $100 each. A monthly demand is estimated to be 400 units. If the firm uses 30% annual rate for holding inventory (Assuming 200 working days per year):

(a) What is the most economical lot size to produce? using only ERL method

(b) What is the average inventory level (units)?

(d) What is the total inventory cost (=setup cost + carrying cost each)?

(e) What is the approximate length of a production run cycle in days?

(f) What is the number of days for production in days?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92550211

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