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Ross Whites machine shop uses 2,500 brackets during the course of a year, and this usage...

Ross Whites machine shop uses 2,500 brackets during the course of a year, and this usage is relatively constant throughout the year. Ross White is considering making the brackets in-house. He has determined that setup costs would be $180 in machinist time and lost production time, and 100 brackets could be produced in a day once the machine has been set up. Ross estimates that the cost (including labor time and materials) of producing one bracket would be $10. The holding cost would be 10% of this cost. There are 250 working days yearly.

(a) What is the daily demand rate?

(b) What is the optimal production quantity?

(c) How long will it take to produce the optimal quantity? How much inventory is sold during this time?

(d) If Ross uses the optimal production quantity, what would be the maximum inventory level? What would be the average inventory level? What is the annual holding cost?

(e) How many production runs would there be each year? What would be the annual setup cost?

(f) Given the optimal production run size, what is the total annual inventory cost?

(g) If the lead time is one-half day, what is the ROP?

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Math   Statistics-And-Probability   
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