Abc co can manufacture a subcomponent at the rate of 500, Operation Management

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Abc co can manufacture a subcomponent at the rate of 500

ABC Co. can manufacture a subcomponent at the rate of 500 per day when required. Its annual demand for this item is 60000 units. Assume 250 working days per year. Holding cost is $15 per unit per year. Set-up cost is 500 per set-up. Find:

a) Economic production order quantity.

b) How many production runs will be made per year.

c) What will be the maximum inventory level?

d) What percentage of time during the year will this item be produced.

e) What is the annual cost for ordering and holding inventory?

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Operation Management: Abc co can manufacture a subcomponent at the rate of 500

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Operation Management: Abc co can manufacture a subcomponent at the rate of 500

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