March 25, 2017

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A toy manufacturing makes its own wind-up motors, which are then put into its toys. While the toy manufacturing process is continous, the motors are intermittent flow. Data on the manufacture of the motors appears below.
Annual demand (D)=50,000 units
Set-up cost(S)=$85 per batch
Carry cost=$.20 per unit per year
Daily subassembly production rate=1,000
Daily subassembly usage rate=200

a. To minimize cost, how large should each batch of subassemblies be?
b. Approximatley how many days are required to produce a batch?
c.How long is a complete cycle?
d. What is the average inventory for this problem?
e.What is the total inventory cost (rounded to the nearest dollar) of the optimal behavior in this problem?

  • A. Production - ,

    Each batch should be 9014 units. It will take slightly over 9014 / 1000 =9 days to make these units. A complete cycle will last approximately 9014 / 200 = 45 days. Average inventory is 3,605 (not one-half of 9014) and the annual costs will total $721.11.

  • A. Production - ,

    thats if Setup cost (S) = $65 per batch
    and Carrying cost = $.10 per unit per year

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