Question

Ace Manufacturing produces commercial lawnmowers units in batches. the company estimates the demand for the year is 10,000 units. It costs about $80 to set up the manufacturing process, and the carrying cost is about 70 cents per unit per year. When the production process has been set up, 120 lawnmowers units can be made daily. The demand during the production period is approximately 60 units per day. The company operates its production area 167 days per year and includes a 5-days lead time to schedule and set up production runs.

Annual demand = D = 10,000 units

Setup cost = Cs= $80

Carrying cost = Ch = 70 cents per unit per year

Daily production rate = p = 120 units per day

Daily demand rate = d = 60 units daily

Question # 1: How many lawn mowers should be produced in each batch (optimal production quantity Q*)? round your answer for Q to a whole number

Question #2: with a lead time of 5-days demand, what is the reorder point in units? round your answer to a whole number

Question #3: what is the cycle time (T) between production runs, # of working days? round your answer to 1 decimal point

Answer 1