Question

You're managing an inspection bench at Trikes and have been tasked to determine your set up time for a particular component.
You've been given the following information
Annual Demand	39,000	units
Daily Demand	150	units
Daily Production	1,000	units
Desired Lot Lize	150	units
Holding cost per unit per year	$10.00
set up labor cost per hour	$40.00

Answer 1

As per Economic Production quantity ( EPQ ) model ,

L = square root ( 2 x Cs x D / Ch x ( 1 – d/p))

Or, 150 = Square root ( 2 x Cs x 39000/ 10 x ( 1 – 150/1000))

Or, 150 = Square root ( 78000.Cs / 10 x 0.85)

Or, 150 = Square root ( 9176.47.Cs)

Or, 9176.47.Cs = 150 x 150

Or, Cs = 150 x 150/9176.47

Or, 2.45

Therefore , set up cost = $2.45

Set up labour cost per hour = $40

Therefore set up time = 2.45/40 hour = 2.45x 60/40 minutes = 3.675 minutes

SET UP TIME = 3.675 MINUTES