Question: Annual demand for a part is 500 units. The pan is currently produced in batches. It takes 2.0 hr to set up the production machine for this pan, and the downtime during setup costs $125/1tr. Annual holding cost for the part is $5.00. The company would like to produce the part using a new flexible manufacturing system it recently installed. This would allow the company to produce this part as well as others on the same equipment. However, changeover time must be reduced to a minimum.
(a) Determine the required changeover (setup) time to produce this part economically in batch sizes oft unit.
(b) If the part were to be produced in bath sizes of 10 units instead of i unit, what is the implicit changeover time for this batch quantity?
(c) How much are the annual total inventory costs to the company when the batch size = 1 unit?